The Budget was historic – falling in the middle of the COVID-19 crisis and being the first of the new Government, this was one to remember. The Chancellor, Rishi Sunak, announced the biggest infrastructure spending plan in decades, together with a serious cash injection into the economy to help tackle the impacts of COVID-19.
Below, we have put together the key elements relating to the self-employed and those operating in the construction industry.
This Budget review looks not only at specifics such as the introduction of IR35 changes next month and the implementation of the VAT reverse charge for building and construction services in October but also the big picture items, such as the support offered to the self-employed during the COVID-19 crisis and the impact of increased spending and large-scale building on job creation and skills in the years to come.
COVID-19 support for the self-employed
At the forefront of everyone’s mind are the challenges facing the country given the current COVID-19 outbreak.
In the Budget, the Government outlined several measures to be implemented in the short term to support the self-employed.
- The income floor in Universal Credit will be temporarily lifted/relaxed so that those who are self-employed do not face hurdles to accessing potential loss of income.
- “New style” Employment and Support Allowance and Universal Credit will be payable to people affected by COVID-19 or self-isolating, in accordance with government advice, from the first day of their sickness rather than the eighth.
- HMRC has drafted in extra staff to operate a dedicated COVID-19 related support line. This helpline allows any business or self-employed individual who is concerned about meeting their tax obligations due to the impact of coronavirus to get practical help and advice. Up to 2,000 experienced call handlers are available to support businesses and individuals when needed. The helpline number is – 0800 0159 559.
There was also practical help for small and medium businesses. A new temporary £1bn coronavirus business interruption loan scheme will see banks offer government-backed loans of up to £1.2m to SMEs to ease cashflow fears.
The Guild stands ready to support any client who wants helps tackling or understanding any of the above in these uncharted times.
IR35 and Reverse VAT changes press ahead
The Government’s changes to the off-payroll working rules (IR35) will go ahead as planned on the 6th April. Whilst not mentioned within the Chancellor’s speech, the Budget reiterated that, “The government has recently concluded a review of the reform, and is making a number of changes to support its smooth and successful implementation. The government believes it is right to address the fundamental unfairness of the non-compliance with the existing rules, and the reform will therefore be legislated in Finance Bill 2020 and implemented on 6 April 2020, as previously announced.”
The Guild has been working with our partner companies and retained experts to provide smooth transition for clients and limited companies which are affected by these changes.
The VAT reverse charge for building and construction services will go ahead in October after being delayed for a year. A VAT-registered business receiving a supply of specified services from another VAT-registered business will account for the VAT through the VAT return instead of paying it to the supplier. It will be able to reclaim that VAT subject to the normal rules. The supplier will then need to issue a VAT invoice that indicates the supplies are subject to the VAT reverse charge.
At the Guild we have already guided several clients through this forthcoming change and have systems in place ready to deal with impact of the legislation in October.
Should you wish to talk to one of our experts about either IR35 or VAT, please contact us on – 020 8515 2999.
Levelling up – £128bn a year to be spent on infrastructure
Over £640bn of infrastructure spending was announced by the government on Wednesday. There was a clear attempt by the government to be seen as levelling up across the nation and, in their view, investing in areas which they feel have been left behind. The list was extensive and included:
- A new affordable homes programme of £12bn
- £1bn invested into removing cladding from unsafe buildings
- A multibillion pound investment into rails and roads
- £5.2bn invested over 6 years to tackle flooding and build defence
The investment has been welcomed across the industry as a “good news” story that will boost productivity and also create jobs across the entire UK construction industry.
The Guild recognises the ongoing skills shortage in the industry and, in particular, the restrictions on workers within government projects. If these proposed projects are to be achieved, the government, working alongside the industry, will have to tackle these two issues head on.
Commenting on the potential of job creation, Peter Smallwood, Guild Public Affairs, said, “The various announcements suggest that thousands of jobs will be created. What is crystal clear, even at this early stage, is that the Government is going to need a highly skilled and flexible workforce to deliver these targets, such as that already available in the body of the existing talented and well-paid self-employed workers in the industry.”