By: Emma Tait-Barber

Four Things the Government Must Do to Support Freelancers and Contractors

As one person companies, freelancers and contractors often find themselves affected directly - and sometimes more so than employees - by wider events, whether economical, social or political.

This has meant the likes of the coronavirus pandemic, along with soon to be introduced IR35 reform in the private sector and, who could forget, Brexit, are each impacting contractor businesses and therefore the individuals who own them.

According to our partners, the trade body for the self-employed, IPSE, these three challenges have been at the forefront of contractors’ minds in recent times, knocking business confidence, impacting earnings and the mental well-being of many independent professionals.

But such is the importance of the UK’s 4.76m freelancers, contractors and small business owners, not just to the economy but to society in general, IPSE has developed something of a roadmap for the self-employed.

Included in this plan are four recommendations that IPSE is encouraging the government to consider, as it looks to help self-employed workers of all varieties.

Make Brexit work for freelancers

IPSE say Brexit has been “plaguing” the economy since the referendum result in 2016 and was the reason contractor confidence fell into negative territory, where it still sits now, more than four years later.

The trade association says, as business owners, freelancers need certainty and a stable economic environment in which to work. Given Brexit is still yet to be fully resolved, the government has been urged to make clear to the self-employed the possible implications of a no deal.

But IPSE wants some kind of deal - one that allows for continued access to the Single Market. With many UK freelancers working on contracts in Europe, whatever the outcome of ongoing Brexit talks, the lobbying body has stressed the importance of prioritising easy movement of these workers.

Repeal IR35 and review the tax system

IPSE, which was formed over twenty years ago as an anti-IR35 lobbying group, has not given up hope of persuading the government to rethink the extension of IR35 reform in the private sector.

The changes, which will be introduced on 6th April 2021 after having been deferred by a year due to the pandemic, will mean contractors can no longer determine their IR35 status when engaged by medium and large companies (small companies are exempt). Instead, these businesses will begin administering the rules. This is similar to public sector changes in 2017, that saw all public sector bodies pick up the IR35 responsibility.

With many contractors worried about the changes, IPSE has encouraged the government to reverse its decision to roll out the reform this April until a full review of the public sector changes has been conducted and the impacts of Coronavirus are better understood.

According to IPSE, “these rules hold back innovative freelancers” and are “open to abuse by employers seeking to restrict the rights of workers through false self-employment.” In the meantime, the association called for a fundamental review of the UK’s “outdated tax system”, exploring ways it affects the self-employed.

Support contractors though Coronavirus

IPSE has said that although the government’s Self-Employment Income Support Scheme (SEISS) is welcome, it misses out too many of the self-employed and that the government must open up the scheme to all self-employed in need. IPSE has estimated that a third of the self-employed are excluded from the scheme, including sole directors of limited companies, the newly self-employed and many others.

James Foster, Head of Partnerships at SJD Accountancy, commented:

Whilst a lot of the financial support offered has been welcome, there is a large group of the self-employed workforce that haven’t met the criteria for this support and understandably feel that they have been forgotten.

Because the pandemic is likely to have a long-lasting effect on the economy, with much of the UK facing further lockdowns, IPSE has said “a tailored solution for supporting the self-employed” is needed and presumably one better suited to its core membership (limited company contractors).

Improve access to training for the self-employed

Described as the “silver bullet” for improving productivity and increasing earning potential, better access to training would ensure freelancers and contractors are equipped to overcome the challenges they face.

Learning new skills and methods will, according to IPSE, help the self-employed earn better and run more successful businesses. However, finding the time and money to upskill isn’t easy, as shown by the mere 12% of the UK’s self-employed who have undertaken training in the past three months compared to 26% of employees.

This noticeable difference has resulted in calls for training to become a tax-deductible business expense, which IPSE explains would enable struggling freelancers to “gain new skills and adapt their business offer to new markets.

Going forward, the lobbying body intends to make these points crystal clear to the government as it champions the best interests of millions of self-employed workers who, as IPSE’s Andy Chamberlain said, “can fuel the economic recovery, stave off unemployment and provide UK businesses with the flexible expertise they need to prosper.

For more information

As well as campaigning for the best interests of contractors, IPSE have a membership that provides many benefits from tax investigation cover to legal helplines. This membership is included within SJD’s Elite package. If you would like to find out more, request a callback and a member of the team will be in touch.

How can SJD Accountancy help?

Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.

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