CEO update July: IR35, new campaigns and more from your membership than ever
- 31 Jul 2020
July has been another eventful month for IPSE and the freelance community. Although there was disappointment on the IR35 front, the struggle for a fair tax system for freelancers continues – alongside important new campaigns to protect the self-employed in the potentially turbulent months ahead. This month also saw the completion of the IPSE Membership Survey and I’m delighted to announce there will be some big improvements to your membership coming soon in response to it.
A flawed Finance Bill
At the start of July, there was a high-profile debate in Parliament about an amendment to the government’s 2020 Finance Bill. This amendment, put forward by Conservative MP David Davis and Liberal Democrat MP and leadership contender Ed Davies, would have delayed the changes to IR35 until April 2023.
In the end, the amendment was defeated by 317 votes to 254. It was a disappointing result, but the reality is this government has a large majority and is determined to drive this through against all opposition. I’d like to thank everyone who wrote to their MP and helped IPSE push this issue so far up the Parliamentary agenda.
We continue to argue against these changes, but we are also broadening the debate. IR35 is not just a damaging, ill-conceived piece of legislation; it is also a symptom of a wider problem: a tax system that is not designed for modern ways of working like self-employment. We are pushing for a full review and wholesale reform of the tax system to make it work fairly for employees and freelancers alike. We have already spoken to the Treasury about the idea and now we are leading the discussion with other self-employed and business groups. This is the new debate and if we make these reforms a reality, they will make confused, retrofitted policies like IR35 redundant.
An uncertain summer
IR35 is not the only looming threat to freelancers, as we argued in City AM this month. Despite helping some through the Self-Employment Income Support Scheme (SEISS), the government has still not done enough during the pandemic to protect groups like sole directors of limited companies and the newly self-employed.
Many of us are now rubbing our eyes and tentatively emerging from lockdown into the summer sun. But as we do, the threat of a second wave and a renewed lockdown loom larger and larger in the headlines.
August will see an abrupt end to SEISS (something we warned about across the national media) and almost certainly no extra support for the newly self-employed and limited companies (a problem we continue to highlight in the national press). Certain regions of the UK are already being locked down again and our thoughts turn urgently to what a second national lockdown could mean for freelancers and the self-employed.
Last month, the Treasury Select Committee published its report on the gaps in SEISS, which adopted our “ready-made solution” to the lack of support for limited companies: a “pay now, claw back later” system. This month, the government published its response, saying that although it looked into this, it would be too “resource-intensive”. With the prospect of a second lockdown looming, we’re going to press the case that the government should devote whatever resources it takes to protect all the UK’s freelancers.
Another related issue is the Bounce Back Loan Scheme, which some freelancers have been relying on to get through the crisis. There have been reports of freelancers struggling to access these loans from some suppliers, but at IPSE we have ensured that our partner, Starling Bank, is reliable and fair – and that there have been no such problems with them. There may be a new campaign on the horizon as government and banks consider when and how these loans should be repaid. Especially with the risk of a second lockdown on the horizon, we will argue repayment must be lenient and flexible – possibly even with student loan-style repayments that only begin after a certain level of earnings.
Protecting you from changes to come
It’s not just on Covid and reforming the tax system that we’re making your voice heard in government. There are many other issues where we recognise the self-employed need a voice in government and the media. There is another looming threat for freelancers in what the Chancellor has said about recouping the enormous cost of the coronavirus support schemes. There is a serious risk the government is considering raising freelancers’ National Insurance Contributions. With limited companies and many other groups missing out on support, this would be enormously unjust and we will fight the government on this every step of the way. We pushed the government back before when it tried to raise self-employed NICs and we can do it again.
Ominous also is the fact that the Treasury Select Committee is beginning a consultation on how different ways of working are taxed: this includes taxation of dividends, through which most limited company directors pay themselves. We will be representing freelancers in this consultation and pushing hard against any unfair suggestion of raising dividend taxes.
This month, HMRC also announced it would be extending Making Tax Digital and dangled the prospect of increasing the frequency of reporting for all freelancers. We recognise the need for MTD, but this month we warned that increased reporting could mean a serious added admin burden for freelancers. We’ll be pushing this case and making sure the government doesn’t make tax any more complex for you than it already is.
More from your membership
Turning away from the world of policy for a moment, this month also saw the completion of the IPSE Membership Survey. I’d like to thank everyone who took part: we’ve been processing the results and listening carefully to what you want from your membership.
I’m delighted to announce that as a result, in the coming weeks and months you can expect a lot of new and exciting improvements to your membership. In fact, we’ve already launched one important new feature: we’ve secured a deal with our partners Markel that will give you 69% off their Law Hub, which contains hundreds of template contracts and letters, legal guides and other invaluable resources to make it safer and easier to run your business.
We also heard your calls to get more involved in IPSE – particularly in our policy and campaigning work. That’s why we’re launching our Policy and Research Committee, which you can still sign up to, to have a bigger say in our direction and the causes we campaign on.
This is only the start though: there will be plenty of other improvements in the coming months to help you get more from your membership. And, as always, you can be sure we’ll be pressing your case in government and industry and doing everything we can to champion freelancers and the self-employed.
Wherever you’re reading this (or squinting at it while adjusting to the glare), keep safe and enjoy the sun this August.
Meet the author
