The self-employed discussions Westminster should be having

This was first posted as part of our fortnightly 'Freelancing in Focus' LinkedIn Newsletter. Subscribe today for the latest opinions and updates from our team.

We’re talking about the next election already. But why? Wouldn’t it be better to focus on lobbying the current government, rather than thinking about a future one?

We can do both. Only this morning, I was in Westminster meeting with ministers as part of government’s Small Business Regulatory Taskforce, discussing ideas for easing the burden of red tape on our members. We meet with ministers and officials regularly on our members’ behalf, and that work will continue.

But in the background, policy teams at party HQs are quietly working on their manifestos for the next election. And with party conference season arriving in a few months, it’s a time when new ideas and policy proposals are discussed in the open.

That’s why yesterday, on National Freelancers’ Day, we published a discussion paper for MPs across the political divide. In it, we set out some key areas we think the self-employed need to see some change in.

As our Managing Director, Vicks Rodwell, highlighted on her LinkedIn recently, the freelance job market feels especially unpredictable. It feels like clients are stuck in ‘wait and see’ mode, delaying projects and big spends until the way forward becomes clearer.

But there’s one layer of uncertainty that could be removed by an ambitious party at the next election – the off-payroll working rules.

Keen to avoid entanglements with HMRC over ‘disguised employment’, many clients are still reluctant to hire contractors ‘outside IR35’ because of these rules. This isn’t because they can’t get the rules right; but the perceived cost of defending a determination – both financially and in terms of publicity – will almost certainly be weighing on compliance departments’ minds.

Continuing the trend from previous years, our most recent survey of contractors found that more than half had rejected an offer of work solely based on it being deemed inside IR35. And many are being asked to agree to pay their client’s tax bill in the event HMRC later disagrees with the determination.

These are symptoms of a regulation that is deterring hiring – the last thing the economy needs at a time of higher unemployment and economic uncertainty.

Contractors with memories of previous elections, as far back as 2010, will be weary of pledges to ‘review’ or ‘look into’ IR35, which have ultimately led us to today’s situation. For our members and their clients, there is a clear case for the rules around hiring self-employed individuals to be overhauled.

By April 2028, HMRC wants landlords and sole traders earning as little as £20,000 a year from property or self-employment to sign up for Making Tax Digital for Income Tax (MTD).

We think that’s too low, and want the next government to halt the rollout at £30,000.

To be compliant with MTD, sole traders will need to use HMRC-approved software – and that software doesn’t always come free.

But sole traders earning less than the minimum wage – and indeed less than the median income – shouldn’t have to worry about MTD at all. They could be fledgling businesses, or even casual businesses having a bumper year.

We have similar concerns with the Trading Allowance, which is currently set at £1,000. Recent bouts of inflation have made this threshold easy to cross for even the most casual traders.

Rather than asking small traders to comply with new sets of requirements in their nascent stages, we’re urging the parties to keep those earning £30,000 out of MTD entirely, whilst raising the Trading Allowance to £3,000.

These simple, low-cost measures would be popular with the estimated 500,000 side hustlers and serve as proof that the parties are awake to the rising popularity of casual self-employment.

In 2014, IPSE and the Cabinet Office agreed to a code of practice for contract roles requiring security clearance. It was implemented following concerns that contractors were being asked whether they held national security vetting clearance for certain jobs before they could apply.

But we’ve heard a growing number of complaints from members that the code is no longer being adhered to in practice.

Contractors are reportedly being asked to provide evidence of their security clearance at the application stage, meaning that otherwise qualified candidates are locked out of roles from the outset.

The sensitive nature of roles requiring security clearance means government can ill-afford to be complacent when filling these posts. That’s why the code of practice was written; to ensure security-cleared roles are filled based on merit, rather than convenience.

We’re calling on the parties to commit to making the code of practice mandatory, so that contractors are no longer unlawfully excluded from roles they are qualified for.

New mothers who are self-employed can claim the Maternity Allowance. But unlike employees, who get 90% of their earnings for the first six weeks under Statutory Maternity Pay, the self-employed do not get this level of support.

Meanwhile, self-employed fathers receive zero support at all.

The question remains: why should self-employed parents get less?

Parental pay isn’t a ‘nice to have’ – it serves an important public health benefit for parents and children, and an economic benefit to society as a whole.

Government is part-way through its own review of all parental leave. But we’re urging all political parties to ensure that the self-employed are no longer left with less support, pledging to finally put self-employed parental pay on par with the statutory amount.

Our own manifesto is packed with proposals, supported by our members, to make life easier for the self-employed.