Budget representations close next week: what the contractor bodies are asking of Healey
The Treasury's portal for representations ahead of the Autumn Budget closes on 9 September, and the contractor industry's submissions to John Healey, seven weeks into his chancellorship, have taken shape. They are notable for what they do not ask. Nobody expects the off-payroll rules to be reopened, and the industry has largely stopped requesting it.
The FCSA's five asks, published on 27 August by its chief executive Chris Bryce, begin instead with employer's National Insurance. The rate rose from 13.8 to 15 per cent in April 2025 and the threshold at which it starts fell from £9,100 to £5,000. Bryce argues that the threshold cut did more damage than the rate rise, and did it at the bottom of the pay scale, because it brought the lowest-paid umbrella workers into the charge for the first time. The association wants both reversed.
A statutory status test
The second ask is the one the industry has made of every Chancellor since 2000: a statutory test of employment status, drawn as a bright line, so that a business can know whether an engagement is employment or self-employment without a tribunal. Bryce's phrase is that every other reform, for contractors and for others, is built on sand until status is settled. The government's employment rights legislation, which set aside the single worker status proposal, has left the three-tier structure and its case law intact.
The third is Making Tax Digital for income tax. The threshold for mandatory quarterly reporting is due to fall from £50,000 of qualifying income to £30,000 in 2027 and £20,000 in 2028. Because qualifying income means turnover rather than profit, the FCSA argues, the lower thresholds will sweep in sole traders whose actual earnings are modest, and it asks for the threshold to be frozen at £50,000.
The fourth is aimed at the structures that have grown up since the joint and several liability rules took effect in April. Bryce identifies three: personal service companies used to claim an exemption from the umbrella rules, arrangements that route workers around umbrellas altogether, and employer of record providers based outside the United Kingdom. All three, the FCSA says, classify workers as employed for tax and self-employed for rights, and it wants the hybrid outlawed.
The fifth is the managed service company legislation of 2007, which the association describes as a business killer for the accountancy practices that serve contractors, and which it wants rewritten so that a firm providing ordinary accounting and payroll services is not treated as involved in its client's company.
The advisers' reset
A separate strand of submissions, gathered by the contractor press in the last week of August, asks for what its authors call an IR35 reset. Dan Mepham of SG Accounting wants a framework that gives businesses confidence to engage genuine contractors. Carl Bridges of Caroola wants clearer guidance for hiring organisations, whose risk-averse determinations now limit opportunity. Rebecca Seeley Harris of Re Legal Consulting points to the contractor who is treated as self-employed while still having PAYE deducted, which she says has become the market default. Nicole Slowey of Qdos wants the government to press reset on its treatment of the self-employed as a population.
The public sector's own record makes their case for them. Around £400 million of IR35 liabilities have been acknowledged by government departments and public bodies since the rules they administer were reformed in 2017, a figure the advisers cite as evidence that if the state cannot apply the test, business cannot be expected to.
The Budget is on 28 October. The Chancellor, a Treasury minister between 2002 and 2007 and therefore present when both IR35's early years and the managed service company rules were being argued over, has said nothing yet on any of it. The industry has until Wednesday to make sure he has read the arguments.