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Reflecting on 2020 – The Big Issues Impacting Contractors

2020 is likely to be remembered mostly for the wrong reasons. After all, a global pandemic that brought the world’s economy to its knees won’t be forgotten in a hurry, no matter how much we’d all like to move on from it or how close we are to the rollout of an effective vaccine. But […]

By Tom Jones on 28 Dec 2020
Read time: 5 minutes

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2020 is likely to be remembered mostly for the wrong reasons. After all, a global pandemic that brought the world’s economy to its knees won’t be forgotten in a hurry, no matter how much we’d all like to move on from it or how close we are to the rollout of an effective vaccine.

But while it might be difficult to recall much else of significance that has happened in the past 12 months, there were several other important developments in 2020 that have had a direct impact on UK freelancers and contractors.

So from the Coronavirus crisis to IR35 reform and the long awaited conclusion of Brexit, here are the main talking points from what has been a year like no other.

Coronavirus brings businesses to a standstill

Coronavirus and the subsequent UK-wide lockdown enforced in March set the tone for much of the year. With most businesses temporarily closing their doors and many even shutting down for good, there was an inevitable and dramatic drop in the demand for contract workers in the months that followed.

After what was described as some of the worst months for contractor hiring on record, things did improve slightly, as businesses began opening up again after the easing of lockdown in July. Even so, the Chancellor warned in November’s Spending Review that the economy isn’t expected to return to a “pre-crisis level” until the fourth quarter of 2020.

Unsurprisingly, second national lockdowns across England and Wales, along with regional restrictions across the UK have continued to hamper the availability of contract work in recent months. But with a vaccine being rolled out as we speak, 2021 is looking much brighter for contractors at least.

Contractors left to slip between the cracks of support

When Coronavirus hit the UK, Chancellor Rishi Sunak moved swiftly and unveiled the Coronavirus Job Retention Scheme (CJRS) and the Self-employment Income Support Scheme (SEISS), which were announced in March, soon after the first lockdown was imposed.

The CJRS pays 80% up to £2,500 of an employee’s salary monthly and was recently extended for a full year, until March 2021. The SEISS is similar, offering taxable grants worth 80% up to £2,500 of a self-employed person’s trading profits, with the initiative also running until this coming March.

9.6m employees have been placed on furlough, while 2.3m self-employed workers have so far claimed via the SEISS. So, together both schemes have supported nearly 12m people and counting. The problem? Neither cater specifically to contractors or individuals who work through their own limited company. As a result, 2m small business owners find themselves unable to claim much support from the government, which continues to face significant pressure to tailor the help available for contractors.

You can read more about the support contractors can receive here.

IR35 reform delayed by one year

Buried in the frenzy of announcements made in response to the pandemic was the news that IR35 reform in the private sector would be delayed by 12 months.

Revealed by Chief Secretary to the Treasury Steve Barclay, on 18th March – just weeks before the planned 6th April 2020 rollout – the decision to defer IR35 reform was warmly welcomed by contractors and businesses.

The new and fast approaching implementation date of 6th April 2021 means medium and large private sector businesses have had more time to ensure they are ready to assess a contractor’s IR35 status correctly. In the coming months, we will begin to find out how well prepared these companies are, as they start carrying out IR35 decisions.

For more on IR35 reform and ways to prepare, please visit this page.

Brexit reaching its conclusion

Remember Brexit? With everything else that has happened in 2020, it would be easy to forget that on 31st December the transition period will end and the UK will depart the European Union.

Over the course of the year, there has been toing and froing, negotiations and uncertainty regarding the UK’s future trading relationship with the EU. At the time of writing, we are still waiting to see if the Prime Minister can strike a trade deal with the EU. This means contractors engaged by businesses in the EU or those living and working in member countries are waiting to see how Brexit will affect them.

You’ll find the latest information on the government’s Brexit website.

Vaccine offers hope to contractors

As touched on earlier, the arrival of a Coronavirus vaccine in early December was the cause for cautious optimism. With vaccinations underway here in the UK, there is real belief (for the first time in what feels like a long time) that lockdowns will soon be a thing of the past.

Should this prove to be the case, it can only be good news for contractors, who are desperate to make up for lost time. The economy also stands to benefit significantly from this, with research showing that freelancers and contractors improve productivity and contribute to growth.

On reflection, 2020 has been a strange year, with Coronavirus having a huge bearing on contractors, 64.5% of whom told us in our recent survey that they have had at least one project postponed or cancelled because of it. All the while, other issues, such as Brexit and IR35 reform, have shaped the business landscape and had their say on contractor confidence too.

Looking ahead

Looking ahead to 2021, contractors can at least approach next year with renewed hope and some optimism, given vaccinations have started, Brexit uncertainty will at least be over and businesses have had 12 extra months to get to grips with incoming IR35 changes.

 

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