Empowering the Freelance Economy

Self-employed: “forgotten and punished” by Tories now “ignored” by Labour say commentators

Self-employed have ad high hopes for Keir Starmer
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Self-employed little more than ‘footnote’ in Labour manifesto, says insurer to the self-employed marketplace

Labour’s manifesto promises a business-friendly approach but contains little for the UK’s 4.2m self-employed. That was a conclusion made by Seb Maley, CEO of contractor insurer Qdos, today following Labour leader Keir Starmer’s launch of his party’s manifesto ahead of the upcoming general election.

While the Labour Party is positioning itself as the party of wealth creation, it does little to specifically identify the role of the self-employed in that mission, said a Qdos statement.

“Nobody was expecting a rabbit-out-of-a-hat announcement today, but this manifesto will leave a lot of self-employed voters in limbo,” said Maley.

“While Keir Starmer has promised Labour will be pro-business and pro-worker, the needs of the self-employed are little more than a footnote in this manifesto,” he said.

Earlier this week Derek Cribb, CEO of IPSE, expressed disappointment that the Conservatives seem to ignore the contributions of some of he nation’s self-employed, namely solo self-employed company directors.

“The Prime Minister is right to reward the millions of risk-takers in our workforce by scrapping their national insurance,” said Cribb.

“By freeing them from the burden of calculating and paying a second tax on work, the Conservatives would be giving the self-employed sector a much-needed shot in the arm and renew the nation’s desire to strike out on their own.],” he said.

However, Cribb had more to say:

But the Prime Minister would do well to remember that hundreds of thousands more self-employed company directors will not feel the benefits of this landmark tax pledge. If his aim is to back the self-employed, he should ensure that limited company freelancers are supported with equivalent pledges before polling day.

Labour has missed an opportunity

“It’s a missed opportunity – the self-employed have faced a number of challenges in recent years, and need the support of the next government to deliver the flexibility and growth the economy needs,” said Maley.

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator agreed with Maley’s take on self-employed workers not being highlighted in the Labour manifesto today:

In today’s speech, Keir Starmer aka Captain Caution failed to acknowledge the self-employed. If Labour wants growth they need to deliver on their pledge to ‘transform the nature of the job market’ and that means acknowledging the value of the self-employed and how they prop up our economy, particularly in times of recession.

Chaplin said the self-employed has been “forgotten and punished” by a Tory government with the introduction of the off-payroll working rules which have damaged freelancers and the firms that hire them.

“We want Labour to unshackle the freelance workforce and allow them to be their own boss,” he said.  “Whilst Labour must support vulnerable workers the UK’s genuinely self-employed want to be left to get on with running their own businesses.  And that means reviewing IR35.”

He continued, “We expected to hear more from Labour today about their plans to support the UK’s flexible workforce and it fell short.”

No tax rises for “working people”

Labour has pledged that there will be no tax rises for working people. Sarah Coles, head of personal finance, Hargreaves Lansdown, said they have specifically ruled out rises to income tax, National Insurance and VAT.

“However, both Labour and the Conservatives have said they won’t tackle the misery of frozen tax thresholds. It means whoever is elected, you’re set to pay more tax,” she said.

Pay rises will continue to push more people into paying more tax. It has already meant 2.1 million more paying income tax and by April 2029, this is set to rise to an incredible 3.7 million, according to HL.

Meanwhile, the number of extra people forced to pay higher rates of tax by the policy has hit 1.4 million and will reach 2.7 million by April 2029.

“Moving tax brackets doesn’t just mean more tax on your income, it also slashes your tax-free savings allowance and pushes you into paying higher rates on everything from capital gains to dividends,” said Coles.

On top of this, Coles said there are other tax freezes and temporary cuts due to come to an end that Labour hasn’t pledged to extend, including the 5p cut in fuel duty and the stamp duty holiday set to end next March.

Other taxes would rise for specific groups of people

Other taxes will rise, though. Labour has made specific pledges to raise tax for non-doms, end the use of offshore trusts to avoid inheritance tax, change the capital gains tax treatment of private equity pay, raise stamp duty for non-UK residents buying residential property by 1%, and introduce VAT on private school fees.

For parents who have saved and made financial sacrifices to send their children to private school, this additional expense will be another challenge on top of “runaway fee rises” in recent years, said Coles.

However, anyone tempted to consider one of the schemes that are claiming to get around VAT should think twice. Rules are highly likely to include measures designed to catch these schemes out, so you could end up wasting money, or stretching yourself to pay early, and facing the tax charge anyway.

Sarah Coles, Hargreaves Lansdown

Coles reiterates that Starmer made it clear that nothing in the manifesto will need additional tax rises, but Labour has not ruled out changes to capital gains tax.

“At this stage, it’s difficult to know exactly what these changes might be, or whether they would be needed, but for investors with holdings outside tax wrappers, there could be an extra cost. Labour said it is advocating for wealth creation, so it will have to tread carefully on CGT if it wants to ensure the right incentives are in place to create this wealth,” said Coles.

CCGT on primary residence no longer an option for Labour?

Keir Starmer, the leader of the UK Labour Party, has promised that there will be no capital gains tax imposed on the sale of primary residences if his party comes to power. This pledge aims to reassure homeowners and address concerns about potential new taxes on property sales. Starmer emphasised the importance of maintaining stability for homeowners amid ongoing economic challenges, the Guardian reported this weekend.

Keep on top of policies impacting the self-employed

  1. Gary says

    Reform seem to tick a lot of the boxes though? Scrap IR35, raise VAT threshold? Keen to see what Sebs comments are on that lot?

  2. Gary says

    Oh right a feature already covered Reform – never mind, good work 🙂

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