Conservatives’ bold self-employed tax pledge overlooks one key group

Given the Conservatives’ less than positive policies towards the sector during their time in office, it was surprising and dare I say, slightly refreshing, to finally hear the Prime Minister hail the risk-takers and entrepreneurs in our economy; the self-employed.

You may well call it a cynical ploy to win votes from a group that would traditionally be aligned with many of their pro-business, free-market policies. And yes, it may feel rather insincere if like many other self-employed individuals, you’ve found it harder to do business in the last 14 years.

Nevertheless, this is our Prime Minister standing before the country and recognising the vital contribution of the sector and it is of some note. Not least, because self-employment is firmly being pushed up the political agenda.

If the polls are to be believed, the Conservatives are set for a rude awakening on 4th July. Despite this, they will likely play an important role as an opposition party in the next parliament and many of their current backbench MPs are naturally sympathetic to many of the issues impacting the sector.

So, what can the self-employed expect from the Conservatives? And does it go far enough in restoring trust after years of eroding benefits and seemingly targeted policies?

Abolishing NI for sole traders

Appearing as the second policy in their Manifesto was the promise to completely abolish NI for sole traders by the end of the next parliament. Needless to say, this took almost all by surprise. It is an astonishing offer to millions of self-employed individuals that would, if implemented, represent a significant tax cut.

In our response to the Manifesto launch, IPSE welcomed the pledge to abolish NI for sole traders. But we also made the point that company directors have once again been forgotten.

The record of the Conservative Party in office speaks for itself when it comes to company directors; dividend allowance hugely reduced; excluded from support during the pandemic; frozen tax thresholds; corporation tax increased; and the devastating implementation of IR35 reforms.

And yet again, the Manifesto completely overlooks the contribution of these company directors to our economy.

Despite this, it is encouraging to see self-employment given significant prominence in a major party’s manifesto. Will it put pressure on the Labour party to do the same?

Action on late payment

The Conservatives have promised to improve enforcement of the Prompt Payment Code. But they haven’t gone as far as the Lib Dems, who have pledged to make the Prompt Payment Code (PPC) mandatory for large companies and the public sector.

IPSE currently sits on the PPC’s compliance board and has long-called for the Small Business Commissioner (SBC) – who oversees the PPC – to be given stronger powers to clamp down on late paying clients.

Whilst in government, the Conservatives were planning to beef up the powers of the SBC which could have seen more proactive action taken against companies with poor payment practices.

It’s vital that the next government takes bold action on late payment and IPSE will continue to call for 30 days to become the standard UK commercial payment term.

Reforming Childcare

After Jeremy Hunt expanded childcare provision with the phased introduction of free hours, the Conservatives are now pledging to tackle the inherent unfairness of the Child Benefit.

This is whereby single earner households can start to lose their Child Benefit when a household with two working parents and a much higher total income can keep it in full as it is measured on an individual basis.

The Conservatives have now pledged to move to a household assessment rather than an individual basis for Child Benefit in an attempt to correct this current discrepancy within the system.

We need your help

At IPSE, we’ve been contacting all prospective parliamentary candidates with our manifesto and urging the parties to understand and embrace this sector during this election campaign.

So far, candidates have been receptive to our key asks. But we also need your support in getting this into the hands of our future MPs and getting self-employment up the political agenda on the campaign trail.

The more members we have contacting candidates with these key asks for the whole sector, the more likely we are to see the issues affecting them championed in this election campaign.