It's important to take any speculation about the Budget with a pinch of salt. Nothing is confirmed until the Chancellor stands at the despatch box.

But with rumours all pointing towards the same tax changes, it’s worth considering how such changes could impact the self-employed. 

Before diving into the details, it’s worth noting that many of the tax proposals currently circulating have been linked to the Resolution Foundation – a think tank whose former Chief Executive, Torsten Bell, is reportedly involved in drafting the upcoming Budget.

Bell has previously called for changes to how the self-employed are taxed, so his involvement suggests that significant changes could be on the table.

One of the most widely reported rumours is of a 2p cut to Employee National Insurance Contributions (NICs). This is expected to be offset by a corresponding 2p rise in Income tax – the idea being that workers wouldn’t face an overall tax increase.

Crucially, if the reports are accurate, this cut wouldn’t include Class 4 National Insurance – which is paid by the self-employed – meaning taxes would go up. 

One other measure being looked at by the Treasury is an increase to the basic rate of dividend tax. Currently, this stands at 8.75%, but a proposal backed by the Resolution Foundation to increase it to as much as 16.5% has reportedly been considered.

While previous dividend tax raids have been framed as targeting “unearned income”, such a move would represent an increase in tax on company directors that pay themselves in this way. 

Another rumour suggests the government may reduce the 5% VAT rate on domestic energy bills. While this would apply broadly, it’s particularly relevant for self-employed individuals working from home.

The Chancellor is also expected to tighten rules around salary sacrifice schemes, potentially capping the amount that can be contributed to pensions without incurring National Insurance Contributions. 

This would particularly affect contractors working via umbrella companies and making use of salary sacrifice schemes. Many of them will understandably feel frustrated at being penalised for making the most of a system they didn’t even choose, after being forced to operate in this way because of IR35.

Despite assurances earlier this year, reports now suggest the cash ISA limit could be halved from £20,000 to £10,000. For the self-employed, who often rely on ISAs as flexible products for both short and long-term saving, this would be a significant blow.

Although not currently part of the rumour mill, many in the self-employed sector will be watching closely for any signs of the government’s consultation on creating a single ‘Worker’ employment status. We’ve been told to expect the consultation before the end of this year, so the Budget could be the moment we hear more on this.

 Given its potential to dramatically alter how we determine employment status in this country – and subsequently, what tax people pay – the self-employed should be keeping an eye out for further information.

In just two weeks’ time, we’ll know for sure whether these rumours were correct. We’ll also be on hand to guide you through what these changes mean for the self-employed.

Join IPSE’s Fred Hicks and Josh Toovey the day after the Budget for their snap analysis.

They’ll be reviewing whether the rumours proved to be accurate, the likely impact of any changes on the demand for contractor and freelancer services, and also sharing their own reaction.