Year-end & cash flow

Could self-employed “tax grab” swing an imminent election? The 40 MPs under threat

Will Britain’s self-employed determine the result of the next general election? New research has revealed as many as 85 MPs could lose their seat if they back the introduction of IR35 into the private sector.

If Theresa May fails to get her Brexit Withdrawal Agreement through the House of Commons, a general election is one potential outcome. Although the idea of another public vote seemed out of the question just a year ago, MPs are running out of options.

An election would likely be dominated by the terms of Brexit, but, as seen in 2017 when Labour framed the election around cuts and austerity, other issues can have a surprising influence.

The Off-Payroll rules being ushered into the private sector by the government could be decisive. Using data from the Office for National Statistics (ONS), ContractorCalculator found that 49% of self-employed constituents would vote against their local MP at the next election if they backed Off-Payroll rules proposed by the Treasury.

Following a lengthy consultation period, chancellor Philip Hammond confirmed in his Autumn Budget that IR35 – the so-called “tax grab” on freelancers – would be introduced to the private sector. Hammond hinted that the rollout would “exempt small business”, but the question remains – how small is small?

The latest research revealed that 85 MPs are at risk of losing their seat if they fail to back calls from the self-employed to scrap extension of IR35.

Commenting on the threat to MPs’ seats if they support the private sector roll-out, Dave Chaplin, CEO and founder of ContractorCalculator said: “Failure to secure the self-employed vote would prove catastrophic for all parties involved.  There is also potentially a lot to gain for some, but those in precarious positions will have to act swiftly and earnestly to win over contractors’ trust.

“Of the vulnerable MPs, there are 40 Conservative and 24 Labour politicians and the Conservatives appear to have a lot more to lose than Labour. The recent Off-Payroll announcement, and multiple draconian measures before it, won’t have done those vulnerable Tory MPs any favours, as they now face an uphill task if they want to save their seats.”

Read more about IR35:

• What is IR35 and does it affect you as a business owner?
• Why rolling out IR35 into the private sector could be catastrophic for the economy
• Former BBC presenter to pay HMRC over £400,000 after losing IR35 case

Chaplin explained that while Labour had many vulnerable seats, IR35 posed a “massive opportunity” to make ground on a government criticised for targeting vulnerable individuals with its tax policies.

He added: “For MPs who are prepared to back up Labour’s arguments by opposing the draconian Off-Payroll regime, any potential general election caused from a collapse in government from Brexit could prove very fruitful.”

“Self-employment is on the rise and the self-employed vote will prove crucial to either party’s fortunes at the next election. I would suggest that no party ignores the needs of these important voters.”

The 49% against IR35 was applied to the number of expected self-employed voters in each constituency to reflect the number of critical votes; a sum which exceeds the majority margin by which 85 MPs claimed their seats in 2017 – in many cases significantly so. 

Top 20 Conservative IR35 political casualties

Top 20 Labour IR35 political casualties

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ITV star pursued by HMRC for unpaid tax bill worth £2m

The legal wrangle relates to the presenter’s earnings as a freelancer, which HMRC claims have unpaid taxes dating back seven years.

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