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PayStream Guide to the Autumn Statement

Paystream News

Julian Ball

Wednesday 11th Dec, 2013

PayStream's Guide to the Autumn Statement

The Autumn Statement contained some noteworthy points for Agencies and Contractors.

The economy is strengthening

The OBR forecast for growth in 2013 has doubled from 0.6% to 1.4% and Osborne was able to announce that the economy is now growing faster than any other advanced economy. This is good news for business and reiterates the general feeling in recruitment that things are slowly picking up. The Chancellor was however quick to point out that there are still tough times ahead.

More jobs are to be created

The Chancellor aims to increase employment with another 400,000 jobs this year. This will mean 200,000 fewer people claiming unemployment benefit and projections show that unemployment will reach the target of 7% by 2015, far earlier than originally predicted.

Tax Avoidance will be tackled

The Chancellor stated: "Today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this parliament. Together it will raise over £9bn over the next five years".

He reiterated his determination to deal with offshore schemes and also promised "to tackle the growth of intermediaries disguising employment as false self-employment, depriving workforces of basic employment rights like the minimum wage in a bid to avoid employer national insurance". We understand that this measure has been introduced to combat, inter alia, the switch of low paid workers from pay day by pay day models to "self-employed" models. The government is also concerned about the use of partnerships (LLPs) as a means of avoiding paying class1 National Insurance contributions. Genuine partnerships should not be affected but of course the devil is in the detail.

Umbrella companies (where workers are employed) are unlikely to be affected by any changes and any legislation is unlikely to target PSCs since there is a separate consultation currently on-going in the House of Lords on IR35 and the use of PSCs.

There may be an impact on the CIS scheme but there will no doubt be a huge lobby by the construction industry against any legislation which increases its costs which the Government will have to consider before giving the go ahead to new legislation.

In terms of timescale the Chancellor stated that "The Government will legislate to prevent employment intermediaries from being able to use contrived contracts to disguise the employment of workers. This will take effect from April 2014 and raise around £400m each year". Draft legislation may be published as early as this week which will be followed by a consultation period.

Any new measures will give further impetus to the general move by agencies to implement small PSLs of compliant providers.

A full update on the Autumn Statement is available here.

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