According to a recent poll of our visitors, just 11% of Conservative-voting contractors plan to back Boris Johnson on 12th December, with a massive 65% planning to switch to the Liberal Democrats as a result of the Tories’ stance on IR35 and the Loan Charge.
Two-thirds plan to switch to the Lib Dems
Over 450 contractors took part in the Twitter poll, which we ran for 24 hours. The result was a massive rejection of the Conservatives, in favour of the only major party which has pledged to review the off-payroll (IR35) rules and end retrospective taxation measures (including the Loan Charge).
If you’re a contractor who would normally vote for the Conservative Party, how have the April 2020 off-payroll (IR35) changes and/or Loan Charge fiasco affected the way you intend to vote on December 12th?
— IT Contracting (@justcontracting) November 24, 2019
Where do the major parties stand on IR35?
Famously, New Labour were the architects of IR35 – named after the 1999 press release which led to the creation of the Intermediaries Legislation in 2000. Their General Election manifesto makes no mention of IR35, nor the Loan Charge.
Despite its reputation as the ‘party of business’, the Conservatives not only failed to undo this clearly anti-business measure when it came to power as part of the 2010 Coalition, but have made the rules even more punitive.
From April 2020, the ‘off-payroll’ rules will apply to limited company contractors providing their services to private sector businesses. The onus of establishing a worker’s employment status will now fall on clients, who are likely to be risk-averse given the ambiguity of the new rules, and the woeful lack of available guidance and tools. This will inevitably force many contractors to abandon their companies and work on a PAYE basis for clients – whilst also suffering a massive drop in income.
The Conservatives also created the Loan Charge – a tax rule which retrospectively targets individuals who have used loan-based payment schemes over the past 20 years – even those which were technically allowed at the time.
The Conservative manifesto is also void of any mention of either tax instrument.
The Liberal Democrats are the only party to specifically mention either IR35 or the Loan Charge.
In their manifesto, the Lib Dems state that they will:
End retrospective tax changes like the loan charge brought in by the Conservatives, so that individuals and firms are treated fairly, and review recent proposals to change the IR35 rules.
One could argue that it is easy for the Lib Dems to make a wide variety of claims to gain votes, as current polling suggests that they are unlikely to win the election.
These are also merely pledges after all, and we have never seen a time where people have less faith in the words uttered by politicians.
However, the Conservative party should be concerned by the mood of the contracting industry, due to the location of many of their marginal seats.
According to polling data, the Lib Dems represent a significant threat to the Tories in a number of seats in London (e.g. Richmond Park, Wimbledon, Finchley & Golders Green) and across the South (e.g. Cheltenham).
Contracting is concentrated in London and the South of the UK (in fact, almost 40% of all roles are based in the capital), so by definition, contractors must also make up a significant proportion of voters in a number of these marginal seats.
There are hundreds of thousands of professional limited company contractors in the UK, and millions of freelancers.
Will the Conservatives and/or Labour come up with last-minute announcements on IR35 or the Loan Charge? It seems very unlikely at this stage. Even if they do, will contractors believe them?