Empowering the Freelance Economy

IPSE Pens Wish List To New Chancellor Zahawi, but will Sunak or other candidates ruin any chances for change?

Nadhim Zahawi
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Following the appointment of Nadhim Zahawi as Chancellor, IPSE is hoping a fresh face at the Treasury could mean the opportunity to request a more pro-freelancer and pro-business approach to build back the economy during the Cost of Living Crisis and beyond. But within hours of the letter being sent, Rishi Sunak announced that he is standing to be the next leader of the Conservative Party after Boris Johnson’s resignation.

Last week the bookies were betting on another candidate, Ben Wallace, the Defence Secretary, who many believe could have declared his intention to stand in the Conservative leadership race, according to The Telegraph.

But it looks like he won’t be going ahead.

The too wishful a wishlist?

IPSE has written to Zahawi directly about the pressing issues that continue to impact those who work for themselves, calling for an immediate increase to the mileage allowance.

The letter focuses also on the impact of IR35 and how the reforms have forced many self-employed individuals to change the way they operate. Similarly, the letter raises the ongoing Managed Service Companies (MSC) review by HMRC, which has caused confusion and stress for those affected.

IPSE has also promised to write to the Chancellor in the coming months on plans to increase corporation tax from 19p to 25p in April 2023.

However, a focal point of the letter was the need to immediately review the current rate of mileage allowance, to better reflect surging fuel costs.

Mileage allowance must reflect the times

In the face of record-high petrol and diesel prices, IPSE has called on the Chancellor to increase the mileage allowance from 45p to 90p per mile, and then reviewed every two years.

The proposal, first put forward by accountancy firm Hillier Hopkins, would provide immediate relief to businesses whilst enabling government to review the allowance rate should petrol prices fall in future.

The current rate of 45p has been in place since 2011; with self-employed businesses that rely on the use of their vehicles now reporting that they have had to turn down work or significantly raise their prices, it is time the Treasury reviews this mechanism and provides a lifeline to these struggling businesses.

IPSE has been contacted in recent weeks by members raising concerns about the current mileage allowance rate, with their stories often recounting the difficulty in maintaining their current business with travel to their clients requiring road travel.

In fact, the increased cost of fuel has meant that many are either seeking work within a smaller radius, trying to pass the cost on to clients or simply rejecting work altogether. These self-employed businesses are now struggling to absorb cost increases and without a change to the current mileage allowance rates, it could see these businesses fall by the wayside.

For a list of Tory Party leadership candidates running at the time of writing go here.

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