Ask Iona - It pays to keep up-to-date with policy changes

How do I keep up-to-date with changes in finance law?

Tax, National Insurance and pensions. For freelancers, these words can spell regular anxiety attacks. Our time is money, and it’s easy to be too busy to pay much attention when changes are announced in the fusty legal minefield surrounding self-employment. But the government’s focus on, some would say targeting of, freelancers in these important areas means it will pay us to keep up to date.


Iona finance law changes


For a start, many self-employed people face a higher tax bill from April 2020 when the IR35 rule is extended to the private sector.


It will force thousands of contractors and freelancers to pay Income Tax, as well as National Insurance (NI) at the 12 per cent rate, rather than a lower rate.


HMRC says ‘small’ businesses will be exempt – but has not yet told us what ‘small’ means.


Clearly, it will be important to be able to show that, in any given contract for a client, you are genuinely self-employed. Otherwise, you will be put straight on the payroll and slapped with a higher NI rate yet receive none of the benefits and perks of a real employee.


Your contract is only IR35-proof if:

  • You are entirely responsible for your business;
  • You could hire someone else to do this particular work;
  • You agree a fixed price for a job, not a time payment;
  • You will fix problems in your own time and;
  • You provide your own tools and equipment.


Quicker down the track comes Making Tax Digital. Anyone above the VAT threshold of £85,000 must, from this 6 April, keep digital records and submit returns using compatible software – but only for VAT.


Then from April 2020, though it could be later, all our Income Tax self-assessment will have to go digital. That means freelancers have just over a year to prepare for what could for many be quite a culture change.


Finally, what about a pension? At present, we self-employed are pension Cinderella’s’, excluded from auto-enrolment into workplace schemes where employers will, from April, make a three per cent contribution. But there is much talk and study afoot about how to do more to get us saving for later life. Watch that space. But meanwhile, one valuable option is already in place for anyone under the age of 40, and that is the Lifetime ISA. Save up to £4,000 a year and get £1,000 from the government, as long as you don’t touch it till you’re 60. I’ve got mine.

Meet the author

Iona Bain Resized.jpg
Iona Bain

IPSE Freelancer of the Year 2018, Founder of Young Money Blog and Author of Spare Change.