The IR35 F-up: how do we explain it to our kids?
If the UK remains inhospitable territory for freelancers then we can probably expect younger generations to have delayed career trajectories.
Most 18-year-olds won’t have a clue what tax regulation IR35 is, but in my family, there’s an exception.
Mum, here, goes on about it on the school run (the tween in the back may even be absorbing some of my rants). It breaks my heart that my kids and their generations (mine cover 2) have had their career wings clipped not only by Brexit and the ability to easily work across the EU (and likewise for their Spanish cousins), but to have the proactive option to go freelance following an apprenticeship, work placement or university course.
If grown men and women are losing sleep over their ability to run their own businesses via a limited company as solopreneurs over IR35 rising costs and confusing Off-Payroll worker status, then will the next generation of workers just not bother? Or will they feel their only course of action is to solely use recruitment agencies and become temp and/or the requisite umbrella company workers, in essence, “quasi freelancers”, rather than build their own name, business and network for themselves?
This isn’t a jab at recruitment agencies, but rather tax policies that stifle existing and future generations becoming freelancers in a proactive and low-risk way.
When you read headlines like “Government owes HMRC £263m after failing to comply with its own tax rules”, then it just says it all, doesn’t it?
Going freelance is a choice driven by life, not taxes
I made the decision that I would freelance years before I even had children. And even before I became a journalist. It was a calculated career path because my husband and I both had careers and jobs that required a crazy amount of international travel. We are talking about the days of quick yet costly satellite phone calls between Kosovo and Buenos Aires.
We wanted to raise our kids with the financial and workstyle freedom that only freelancing at the time could provide at least one of us. Of course, I had to build a career in journalism the old-fashioned way, but there was always the intention to go freelance once I built that foundation of knowledge and experience.
And once we had our first child and a job relocation was thrown into the mix, freelancing just made sense, for me, at least. And I bet there are a lot of other people out there that became freelancers to raise a family and keep a career on track. We only want future generations to also have these work options, too.
Recent graduates need a friendly freelancer economy
If more and more people, especially younger generations, feel the UK is inhospitable territory for freelancers then we can probably expect them to have delayed career trajectories. According to a recent Forbes article, Maybe The Best New Grad Job Is Freelancing. Here’s Why recent university graduates are facing a trifecta of bad news: rising inflation, rescinding job offers and a lack of career job experience.
However, the article suggests that freelancing may make sense for recent graduates who “deeply understand their career interests and goals”.
The report continues: “Young careerists who have presence, clarity of vision, ambition, skills and determination to create their own path may find that freelancing is an attractive alternative.”
The article rightly points out that freelancing also offers talent to build various job and project experiences relatively quickly in one’s career.
But instead, at least in the UK, contractors and freelancers (from joiners to journalists to IT specialists to health and safety consultants) are finding themselves the “unfavourables” over at The Treasury and as a result hiring companies. Rather than hire a local freelancer, companies are being forced to hire from larger non-local companies. Which let’s face it is counterproductive to building an economy of self-sufficient workers and tax revenues. It’s also bad for the zero-carbon agenda.
If we have this crash in self-employment, the whole economy is seriously put at risk.Baroness Kramer, Liberal Democrats Lords Spokesperson (Treasure and Economy)
When government or industry policies F-up freelancing, it F-ups economic growth.
“Self-employment, since 2010, has been the primary source of new jobs in the UK, particularly in crucial future sectors including IT and the creative sector,” says Baroness Kramer, the Liberal Democrats Lords Spokesperson (Treasury and Economy). “If we have this crash in self-employment, the whole economy is seriously put at risk.”
Kramer refers to the impact of Brexit on trade, hitting a lot of the supply chains that involve self-employed people, and recent changes to IR35, have, according to IPSE, that have seen hundreds of thousands of solo self-employed people leave the industry.”
So, how do we explain this to our kids? Why are their career and job experience options becoming more limited at a time when the government needs more people working? And working structures that fit the needs of companies that hire them?
The latest generation of adults aged 18 years and older want to get on with their financial independence, but they will increasingly find that harder to do.
“The current generation’s delay in achieving the benchmarks of adulthood that I once saw in my father is explained by economic factors, rather than an innate shift in levels of maturity,” writes Emma Jacobs in a recent Financial Times Opinion piece.
It is rational, she says, to live with your parents if you are insecurely employed, unable to afford a flat or staying longer in education. She also points out that both she and her father, one whole generation apart, could buy their first homes relatively early, not due to their sophistication, but because of lower property prices.
“That’s just not the case with the current generation of people entering adulthood,” says Jacobs.
If you are a parent or guardian of a young adult and want to help them in considering career options, check out the site Talking Futures. The site has conversation cards to help young adults discuss their strengths and desired working environments when discovering career and job options.
There are careers out there that parents and guardians are not aware of and should try to keep an open mind about them. Some are in high demand, pay very well indeed and can be self-taught through online training and courses.