British entrepreneurialism is under attack by what appears to be counterproductive government-led tax grab and hiring policies, writes Katherine Steiner-Dicks
IR35, Off-Payroll rules, Loan Charges, pocketed umbrella contractor holiday pay and the pandemic-induced Excluded UK turmoil are harrowing challenges freelancers must contend with. For many independent workers, these labour and tax policies are hurting the backbone of the UK economy.
This is not some whinge from the freelancer economy, this is a cry for help shared by big business, too.
The Association of Independent Professionals and the Self-Employed (IPSE) has told The Freelance Informer that all these factors have had “devastating impacts” on the UK workforce and the economy.
“IR35 in particular, is threatening the sector’s ability to recover to pre-pandemic levels,” said IPSE. “The flawed reform has put hiring organisations in charge of making notoriously complex hiring decisions and as a result has led to a rise in incorrect tax determinations. It has also led to over a third of freelancers leaving self-employment due to them being unfairly overtaxed post IR35,” said the membership body, which represents thousands of independent workers in the UK
When The FI asked the IPSE leadership team if they had a minute with Rishi Sunak, what would their message be, they said:
If we had a minute with Rishi Sunak, then we would focus primarily on IR35 and how it is stopping one of the most dynamic and innovative parts of the UK economy from achieving its full potential.IPSE
“Rather than adding uncertainty, the government needs to instead support freelancing during these turbulent economic times. Of course, if we had more time, we would also focus on the cost-of-living crisis as well as a number of other pressing issues affecting self-employed workers,” said IPSE.
Government must get on the side of business says BCC
Shevaun Haviland, Director General of the British Chambers of Commerce, has indicated that the economy is heading into stormy waters, based on the Chamber’s latest economic findings:
“The red lights on our economic dashboard are starting to flash. Nearly every single indicator has seen a deterioration since our last survey in March,” said Haviland.
“Business confidence has taken a significant hit and fears over inflation and cost pressures are at new record highs.
“But it is not too late for the Government to take action to help businesses through these challenging times and put the economy on a more stable footing.
“A cut in VAT on energy bills to 5%, and other steps to relieve the tax burden on firms to encourage investment are crucial.
“Better infrastructure, a strategy to address labour shortages and a unified long-term economic strategy to give businesses more certainty are also needed,” she said.
The Government must swiftly demonstrate that it is on the side of business if confidence to invest is to be restored. Only then will we be able to return some momentum to the economy and find a pathway through the current difficulties.Shevaun Haviland, Director General of the British Chambers of Commerce
Are freelancers going to be pulled back into the abyss?
Concerningly, with worries over the economy rising, the latest quarter’s IPSE Confidence Index survey found that the majority of freelancers (86%) now expect their input costs to increase over the next 12 months – rising from 81 per cent in Q4 2021.
It also found that almost two-fifths of freelancers (39%) are now incurring business debt (slightly up from 38% in Q4 2021), with 16 per cent incurring debt via credit cards issued in the name of their self-employed business.
Despite record levels of inflation and rumours of a global economic recession, new research from IPSE (the Association of Independent Professionals and the Self Employed) has revealed that freelancers’ confidence in their own businesses, in the next three months, has risen from -11.0 in Q4 2021 to 2.2 this quarter. For context, the growth in confidence represents a return to positive figures for the first time since Q2 2021.
Derek Cribb, CEO of IPSE, said: “After a mixture of pandemic uncertainty and post COVID-19 inflation, life for freelancers is finally starting to look up… however, freelancer confidence should not be taken for granted.”
The cost-of-living crisis is still wrecking the UK economy and the government needs to ensure that self-employed workers aren’t pulled back into the abyss.Derek Cribb, CEO of IPSE