Associations welcome recent Budget

Andrew Eldred, Budget, ECA
Andrew Eldred

Calls from the ECA and BESA to protect SMEs from employment red tape and to increase support for engineering skills are reflected in the Budget announcement made by Chancellor Philip Hammond.

The Chancellor plans to change the way self-employed people working for companies are taxed, by extending the public sector IR35 system to the private sector. The Government move is aimed at ensuring that individuals who work through their own companies, but operate like employees, are classified as employees for taxation and national insurance purposes.

After sustained ECA representation to Government, this change only applies to private firms with more than 50 employees or a turnover of more than £10 million, in order to protect small businesses from red tape. These medium and large businesses will be responsible for checking contractors’ status from 6 April 2020, allowing employers time to prepare.

Furthermore, the 10% contribution rate that SMEs must pay when they take on apprentices will be halved to 5%, although the exact date this will come into effect remains to be confirmed. While the change applies principally to SMEs, it could also benefit Apprenticeship Levy payers who have used up their levy pot and wish to take on more apprentices.

Andrew Eldred, ECA director of employment and skills, comments: “The decision to reduce co-investment rates for apprenticeships and apply IR35 changes in the private sector to medium and large employers, show that the Government has taken on board representations from ECA.

“These measures will mean that small businesses won’t be burdened with the changes to taxation, while employers will be able to offer more apprenticeships and narrow the skills gap.”

Alexi Ozioro, BESA public affairs and policy manager adds: “Overall, we are pleased with this Budget. Changes to investment allowances, plant and machinery tax breaks, the Apprenticeship Levy and relaxing the rules around repurposing commercial buildings to be demolished and replaced with homes are all welcome.”

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