Tax and SMEs
Reform UK has pledged to raise the threshold for paying income tax to £20,000, which its representative said would save the lowest-paid workers £1,500 per year and “get people off benefits”. The party would lift the minimum profit threshold for corporation tax to £100,000 and reduce the corporation tax rate from 25% to 20%, then 15% from year three. It would also cut the entrepreneurs’ tax to 5%.
Kevin Fitzgerald, UK managing director of HR software Employment Hero, commented that while the tax reductions were welcome, they did not go far enough to address the needs of small businesses.
Speaking to HR magazine, he said: “The cut in entrepreneurs' tax could lead to an influx of new founders pursuing their dreams. However, the biggest challenge for SMEs remains untouched: employment.
“What SMEs really need from government is a clear plan to address unemployment; only then can our economy flourish. A good starting point would be more investment and commitment to recruitment technologies.”
Reform's manifesto also stated that the party would abolish IR35 rules to support sole traders and support SMEs by abolishing business rates for high street-based SMEs. This would be offset by the Online Delivery Tax at 4% for large multinational enterprises.
Paul Newsham, a chartered accountant and CEO of the Payroll Compliance Authority, a not-for-profit accreditor in the outsourced payroll sector, told HR magazine that the abolishment of IR35 would be popular.
He said: “Abolishing IR35 rules would be a popular move for employers and the self-employed, particularly contract workers.”
However, he criticised the proposed reforms for their lack of detail.
Newsham commented: “They talk of slashing wasteful spending and improving efficiency but this is hyperbole rather than a plan of action.
“Whilst the intention of these pledges, or the party’s ‘contract’, is no doubt to impact as much of the electorate as possible, the lack of detail makes it impossible to fully assess.”
Read more: IR35 offset ignites confidence to hire contractors, says HR
Immigration
The Reform UK party pledge to freeze non-essential immigration, with the only exception being for essential skills, especially in healthcare.
The party's leader has also promised to raise the national insurance rate to 20% for foreign workers, to incentivise businesses to employ UK citizens. Essential workers would be exempt from the tax, as well as small businesses with five employees or fewer.
Vanessa Ganguin, managing partner at Vanessa Ganguin Immigration Law, told HR magazine that the immigration measures would worsen skills shortages.
She said: “Chronic skills shortages are not only hampering the health and care sectors. Other sectors we work with like to employ staff locally, as it costs far less, but are often unable to.
“They already face some of the highest visa fees and minimum salary requirements in the world to sponsor staff they need when hiring from abroad. On top of that the immigration health surcharge currently adds £1,035 per year per person to the cost of a UK visa (£776 a year for children, students and Youth Mobility visas).
“Adding a further NI tax increase for non-resident employees would further hamstring UK businesses, making the UK perhaps the most expensive country in the world for work immigration.“
She added that the measures would particularly impact SMEs and the education and engineering sectors.
Read more: SMEs call for UK to open borders to fill labour shortages
Welfare and benefits
The party claimed it would reform benefits to encourage people to return to work. The reforms would include support for training to help people back to work, particularly people between the ages of 16 and 34 years old. “Employment is critical to improving mental health,” the manifesto stated.
The manifesto also stated that the party would withdraw benefits for job seekers who were fit to work if they did not find employment within four months or accept a job after two offers.
The party is proposing to reform the work capability assessments, which it said should be face-to-face. Reform UK representatives suggest independent medical assessments for personal independence payments, but said that people registered with severe disabilities or serious long-term illnesses would be exempt.
Reform UK also called for "front-loading" of the child benefit system for children aged one to four, which it theorised would give parents the choice to spend more time with their children. “The majority of mothers would choose to stay at home more if they could,” the party suggested.
Pensions
The party has claimed that it would review the current pension system, which it referred to as “riddled with complexity, huge cost and poor returns”. The contract points to the Australian pensions system, where it states that savings and pensions were “better and cheaper”.
The manifesto also commits the party to ending 'the mineworkers pension scandal' and promises to implement findings recommended by the Business, Energy and Industrial Strategy Committee in 2021.
Employment law
Lastly, Reform UK would scrap EU regulations with immediate effect if it won the next general election. This would include laws on employment.
The contract also suggested that the party would replace the 2010 “Equalities Act” (The Equality Act) that “requires discrimination in the name of ‘positive action’”. As well as this, it would scrap DEI rules that “have lowered standards and reduced economic productivity”.
Charlie Thompson, employment lawyer and partner at law firm Stewarts, told HR magazine the Equality Act would be difficult to remove due to the impact on legal certainty.
He said: “The current government had a similar policy, setting a deadline of 31 December 2023. Before this policy was significantly toned down, the Law Society raised concerns that it could have a 'devastating impact on legal certainty'.
“The same concerns will apply if the Reform UK policy was ever enacted.”
He added that scrapping DEI rules would increase the number of tribunal cases for discrimination.
Thompson said: “The proposed change to positive action and standards may lower costs in the public sector, but would be likely to increase the number of discrimination complaints.”
