Yesterday’s general election brought the Labour Party into power in a “loveless landslide”, a significant shift after years of Conservative rule. With their comprehensive agenda to reshape economic and social policies, freelancers and contractors must understand how these changes could impact their work. This article breaks down the key elements of Labour’s proposed policies and offers guidance on how to navigate the new political landscape.
1. Taxation Policies
Corporation Tax
Labour plans to maintain the current 25% corporation tax rate but will introduce a business tax roadmap within the first year. This roadmap aims to provide clarity on tax planning and compliance for businesses.
Impact: Contractors operating through limited companies should prepare for stable corporate tax rates but anticipate potential changes in tax rules and deductions as Labour refines the system. Staying informed about the roadmap will be crucial for effective financial planning.
Income and Wealth Taxes
No new wealth taxes or increases in income tax rates have been proposed. However, Labour plans to address the “tax gap” by targeting uncollected taxes through enhanced compliance and digitisation.
Impact: While income tax rates remain unchanged, freelancers should be prepared for stricter enforcement and compliance measures. Ensure your financial records are accurate and up-to-date to avoid penalties.
2. Workers’ Rights
Labour’s manifesto includes several measures to strengthen workers’ rights, which will significantly affect freelancers and contractors:
Employee Status and Rights
Labour aims to simplify employee status and grant full rights to most workers. This includes immediate protection from unfair dismissal from the first day of employment and aligning the minimum wage with the national living wage for all adult workers.
Impact: Freelancers may face reclassification as employees if Labour’s definition of worker status changes. This could impact benefits such as sick pay, holiday entitlement, and the right to a minimum wage. Review your contracts and consider seeking legal advice to understand your status and rights under new regulations.
Ban on Zero-Hour Contracts
Labour suggested a plan to ban zero-hour contracts, aiming to provide more security and predictability in work arrangements.
Impact: If you currently work on a zero-hour basis, you might need to renegotiate contracts to comply with new regulations. This could provide more stability but may also limit flexibility.
Right to Disconnect
Labour proposes introducing a “right to disconnect,” allowing workers to disengage from work communications outside of standard hours without penalties.
Impact: This policy could affect how freelancers manage their client communications. Establish clear boundaries and working hours in your contracts to ensure compliance.
3. Green Economy and Energy Initiatives
Green Prosperity Plan
Labour’s commitment to a zero-carbon electricity system by 2030 includes targets for offshore wind, solar, and onshore wind development, along with the establishment of Great British Energy, a publicly-owned company to co-invest in clean energy.
Impact: Freelancers in the energy and environmental sectors may find new opportunities in projects related to renewable energy and sustainability. Stay updated on tenders and contracts arising from these initiatives to capitalise on emerging markets.
4. Housing and Planning
New Homes and Private Rental Sector
Labour aims to build 1.5 million new homes, prioritising social and affordable housing, and plans to abolish “no-fault evictions” in the private rental sector.
Impact: Freelancers in the construction and real estate sectors might see increased demand for services related to housing development and planning. Those renting workspace or accommodation should be aware of potential changes in rental agreements and tenant protections.
5. Immigration and Compliance
Points-Based System and Compliance
Labour plan to retain the current points-based immigration system but will focus on upskilling the local workforce and strengthening penalties for wage and labour law violations.
Impact: Freelancers employing subcontractors or operating in industries reliant on migrant workers should prepare for stricter compliance checks and possible changes in hiring practices. Focus on enhancing local skills and ensure adherence to labour laws to avoid penalties.
6. Financial Services and Regulation
Brexit and Trade Relations
Labour does not plan to return to the EU or its single market but aims to improve UK-EU trade relations, enhance competitiveness in financial services, and lead in sustainable finance and fintech.
Impact: For freelancers working with EU clients or in financial services, expect potential adjustments in trade and regulatory frameworks. Stay informed about new agreements and compliance requirements to maintain smooth operations.
Conclusion
Labour’s victory brings a suite of likely changes that could reshape the landscape for freelancers and contractors. While some policies aim to provide more stability and rights, others might require significant adjustments in how freelancers manage their business and client relationships.
To navigate these changes effectively:
- Stay Informed: Keep abreast of Labour’s policy updates and their implementation timeline.
- Review Contracts: Ensure your contracts align with new regulations, especially concerning worker classification and rights.
- Plan Financially: Prepare for potential changes in tax regulations and enhance compliance efforts to avoid penalties.
- Explore Opportunities: Look for new business opportunities arising from Labour’s green economy initiatives and housing plans.