What should Autumn Budget 2024 offer tech job board users?

Twenty-five years is how long I have been in the staffing industry, and many of those years in Technology, writes Andy Hallett, managing director of recruitment business advisory Recspand, and co-founder of hirers’ hub Recwired.

But it’s nevertheless still tricky to pick out individual policies to answer the question ‘What should Autumn Budget 2024 offer tech job board users?’

This timely question put another way, ‘What does the tech industry, including its workers who use recruitment agencies and job boards, need from the UK government on October 30th?’

No silver bullet for tech workers at Autumn Budget 2024

At a time when digital platforms including job boards are approaching their first HMRC deadline to submit information about their users, it’s actually not easy to identify even a single policy to boost the UK tech sector.

The biggest help for the tech industry that chancellor Rachel Reeves could provide next Wednesday at Autumn Budget 2024, however, is to give us certainty.

Technology workers and technology companies thrive on understanding the ‘rules of the game;’ if those rules keep changing in terms of regulation and taxation, then it makes it difficult for entrepreneurs to start their businesses and off-putting for existing firms to invest.

What Labour has said so far on tax -- decoded

Before it won general election 2024 on July 5th this year, Labour had already ruled out increases to income tax, VAT, and National Insurance.

Since then, a Treasury minister used a televised interview to claim that the National Insurance pledge only applies to Employee National Insurance.

That appears to be ‘code’ to say Employer National Insurance is going to be increased in next week’s Autumn Budget.

Employer National Insurance increase, a double-whammy for umbrella company users?

The problem for the UK IT industry is that a large number of tech workers are paid via umbrella companies. Should Employer NICs be increased, such a rise will likely be passed on to these umbrella workers in their “assignment rate.”

If chancellor Reeves does put up Employer NI, it would send the unfortunate message that officialdom is not content with just pushing many techies out of their limited companies, as the prior Tory administration did by imposing IR35 reform, but that it also wants these workers to give even more to the exchequer.

It would be a real double-whammy.

Already IR35 reform-hit technologists would now have their unceremoniously reduced take-home pay eaten into -- again.

Autumn Budget 2024 should unveil umbrella market regulation for the tech sector

Further with the umbrella market, it would be good to see some proper regulation of umbrella companies introduced.  

Regulation of ‘brollies’ is desperately needed to stop hard workers who use umbrellas from being pushed into shady tax avoidance schemes.

But back to Labour’s pre-election pledge. The party’s promise to leave alone (Employee) NI, VAT, and income tax, unfortunately, leaves the world where tech companies and computer workers live in the potential crosshairs.

Where chancellor Rachel Reeves will likely raid on Oct 30th: CGT, dividends, pensions

If we partition off changes to those three, on the basis that they won’t be touched at Autumn Budget, the chancellor has three key areas to tinker with:

• Capital Gains Tax,

• Dividend Tax; and,

• Pensions

The strong possibility that Reeves will raid this trio has caused businesses to sit on their hands – and not for a short time.

By my calculations, there’s been a reluctance to act for the past two months.

A disincentive for tech organisations to hire

Combine this investment-inertia with the new employment laws that the government is proposing (four consultations were published yesterday), and it’s clear that Labour needs to be mindful of creating a disincentive for tech organisations to hire.

Some tech outfits tell me that if the UK truly wants to be a hub for future technologies, such as AI, our still-new government needs to look seriously at how to fast-track visas for overseas staff.

Importing, retraining, and low-balling

And I’m inclined to agree. But this quicker importing of tech talent should be explored alongside a retraining of those individuals in the UK today, who are out of the workforce but possess skills that technology or digital advances have made redundant.

Potentially deterring these former workers from re-entering the tech workforce are quite a few IT jobs being advertised that give the impression that employers are ‘low-balling’ candidates.

To these tech or IT-related employers putting up the bare minimum rate or salary in return for tech skills, I would remind them that the technology jobs market will eventually bounce back. Those firms offering under-par rates will then be remembered.

Reeves mustn’t rule out reforming ‘Carried Interest’

But other employers in the tech and digital space, I’d urge chancellor Reeves to encourage.

It is arguably a niche area of tax law, but ‘Carried Interest,’ a model used by private equity firms to reduce their tax liability, could be reformed (and probably should be reformed), next Wednesday.

In addition, in the last few months, I’ve seen a few firms bring forward early-stage fundraising, in case there is an Autumn Budgetary change to tax breaks afforded by the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS).

The importance of SEIS and EIS

To the chancellor, I’d say this -- both the SEIS and EIS are the lifeblood of startup technology companies and without them, the UK would have missed out on several successful enterprises.

A bit like certainty will go down well on October 30th with the tech sector, stability on pensions is also crucial, even if it is one of the three areas which it looks like Reeves will raid.

For too long, pensions have been kicked about like a political football.

Pensions: Lump sum and lifetime allowance should both be left alone

Workers in IT and other key industries have planned their retirement for many years, with the ‘lump sum’ and ‘lifetime allowance’ being key parts of their planning. To change either of these two again would be grossly unfair.

I’d go further. Although changes to tax reliefs and Employer NICs on salary-sacrifices would be unpopular, those would at least allow workers a choice on how much they’d in future pay in.

But there’d be no such choice if the tax efficiencies which many individuals have come to rely upon or will rely upon when they stop work, are interfered with.

A change to the lump sum or lifetime allowance could have a devastating effect on the workforce, potentially meaning workers nearing retirement may decide it’s simply no longer worthwhile to work.

Final appeal: despite IR35 likely staying, a hat-tip to contracting is overdue

 Whether it’s via job boards or recruiters posting their full-time or temporary /contract opportunities, ‘work’ in the tech sector is where I started this article -- and so it’s where I’ll conclude.

The biggest change that technology working and freelancing has seen in recent years concerns the introduction of the IR35 off-payroll working rules. I should say that I am not expecting any changes by the chancellor to the public or private sector ‘OPW’ frameworks, introduced on April 6th 2017 and April 6th 2021, respectively.

However, I’d like Autumn Budget to recognise specialist contractors and acknowledge the role they play as the most flexible, highly skilled small businesses.

The British economy relies on these niche workers for its tech sector and beyond, for significant revenue. Its unparalleled capability to deliver quality and value for money deserves some recognition. Successive governments have overlooked this area and we face a very real prospect of talent, especially tech talent, taking umbrage.

Autumn Budget 2024: Reeves should unveil a creditable roadmap

So very finally, I’d like to see Autumn Budget 2024 unveil a creditable roadmap for the future.

Labour has a massive majority and has got the all-clear to govern for five years. It would be refreshing to see a clear message delivered to the technology sector -- all of its stakeholders, and then stuck too.

As aggressive as the tax changes from the chancellor will invariably be next Wednesday, this adverse impact could be mitigated by Reeves paving a clear path to economic growth with IT and technology allocated a key role.

Remember, not even a Reeves tax bombshell can keep a good tech sector down…

Whatever happens on October 30th, I’m aware that there will be ‘losers’ from the chancellor’s statement. If that ends up being ‘you,’ rest assured that I am hopeful that the technology industry as a whole will do what it always does; analyse, adapt and conquer.