What advisers can expect from Liz Truss as prime minister

What advisers can expect from Liz Truss as prime minister

The UK could see changes to self-employment taxation and a substantial rise in the state pension if Liz Truss is elected as the leader of the Conservative party in September.

Although the result has yet to be announced, figures are showing that the foreign secretary has a clear lead ahead of the other remaining candidate, former chancellor Rishi Sunak.

A recent opinion poll put Truss 32 points ahead of Sunak to be the next Tory leader and prime minister.

So what can advisers expect if Truss is named Prime Minister on September 6?

IR35 reforms

Truss said she believes the current IR35 tax rules are unfair as they force the self-employed to pay too much.

The reform was introduced in April 2021 to the private sector, and means that the responsibility for assessing whether a contractor is self-employed or employed is now with the end client, and not the contractor themselves. 

The liability, and therefore financial risk, was also transferred to the fee-paying party.

The changes have been branded “a mess”, “unpopular” and “puzzling”.

In an interview with The Sun on Sunday newspaper last weekend (August 21), Truss said she wanted to usher in a “small business and self-employed revolution” because they are “the future of our economy”, though she has not given any more details on how she would change the tax.

Dave Chaplin, CEO of tax compliance firm IR35 Shield said: “Whilst it is good to hear that Liz Truss intends to focus on IR35 as part of her vow to help small businesses should she become our next prime minister, my message to her is loud and clear: we don’t need another review, we need action.

"The so-called reforms are a flawed botch and have simply served to strangle contractors and those businesses which hire them. IR35 is an iron shackle, impeding flexible workers who can help deliver growth just when the UK economy and UK plc need them. The time to act is now."

Pensions/triple lock

The triple lock is the mechanism by which the state pension is decided. Under the triple lock, pensions increase by the highest of earnings growth, price inflation or 2.5 per cent a year.

The government temporarily suspended the wages element of the pensions triple lock for 2022-23 to avoid a disproportionate rise of the state pension following the pandemic.

Sunak confirmed the return of the triple lock in May, and Truss has since said she is “fully committed” to the lock.

At a hustings event last month, Truss said she will raise pensions next year by 9-10 per cent.

There may well be more news coming, focused on those who are most vulnerable and least able to cope with rising costs, said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.

"However, we just don’t know," she added.