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- CEO update March 2022: Spring Statement, Managed Service Companies and more
CEO update March 2022: Spring Statement, Managed Service Companies and more
- 5 Apr 2022
March has been dominated by two stories: the ending of restrictions and the ongoing war in Ukraine. While the removal of COVID-19 restrictions in late February has marked the beginning of the end to two years of COVID-19 economic insecurity, the Russian war in Ukraine has signalled a start to a new and potentially more economically damaging crisis for self-employed people and the country at large.
Sanctions imposed by the UK and other Western governments on Russia following the country’s invasion have led to many commentators stating that inflation could soar past its recent post-COVID-19 levels. In fact, the House of Commons Treasury Committee heard that the UK could see inflation peak in the double digits - meaning that thousands of self-employed workers could face a cost-of-living crisis as incomes fail to keep up with prices.
Following the recent worries around inflation, the Chancellor announced a series of measures to curb the worst effects of the cost-of-living crisis during last week’s Spring Statement. While we at IPSE welcomed his announcements around cutting fuel duty, we believe that didn’t go far enough in helping freelancers overcome the crisis.
We also argued that the Chancellor’s decision to push ahead with the planned rise to National Insurance and Dividend tax is a blow to those who work for themselves. With inflation reaching its highest level in thirty years and household bills skyrocketing, IPSE stated the hike comes at the worst possible time for self-employed workers. You can read more about our response to the Spring Statement below:Read more
Despite the bravery of President Zelensky and the Ukrainian people, it is currently unclear how the war will end and how it will impact the UK economy and the self-employed in the long term. We will continue to stand up for freelancers and we will work on ensuring that they are supported by the government during these turbulent economic times.
Managed Service Companies
Towards the end of the month, it emerged that at least two accountancy services providers have recently become subject to an investigation by HMRC under the scope of Managed Service Company legislation, related to the tax year 2017-18. We have also learned that some IPSE members are being affected by this, and there are strong suggestions that other accountancy providers and their company clients are being, or might soon be, affected in a similar way.
We are working to support members affected by this activity, as letters shared with IPSE suggest that those found to be within the scope of the legislation could be required to pay significant sums to HMRC. We have explained the situation in a blog published last week and we are working behind the scenes on getting more answers from legal partners on how those affected can overcome the investigation. We are also hosting a Q&A on April 21st with Paul Mason from Markel Tax where contractors can put forward their questions about managed service companies.
If you are an IPSE member that is affected by this situation, you can also write to us at [email protected] with details of your case for further support.
Q4 2021 Freelance Confidence Index
Despite the recent economic worries following Ukraine, there are some signs of positivity in the self-employed industry. Our recent freelancer confidence index found that freelancers' average quarterly earnings soared in Q4 2021 to their highest level since prior to the EU referendum at £29,547 – up from £25,551 in Q3 2021. For context, the increase in quarterly rates marks an end to two years of COVID-19 uncertainty as the figure represents a doubling of incomes since the start of the pandemic in Q2 2020.
The index also found that the increase in quarterly rates has been fuelled by the return of pre-COVID-19 levels of work in the self-employed sector. It revealed that freelancer capacity has continued to decrease this quarter, with self-employed workers experiencing the lowest average of weeks without work since Q4 2019. Moreover, the Freelance Confidence Index also found that day rates have increased from £535 in Q3 2021 to £584 in Q4 2021. Read the full index below:Read more
Contractor Wealth and Penfold
Over the past month, we have expanded our membership offer and signed two new signs with financial planning freelance specialists Contractor Wealth and digital pension provider Penfold.
Through the new partnership with Contractor Wealth, IPSE members are able to book a consultation with the financial freelance provider and get personalised advice on their pensions, investments, and taxes. On the other hand, with Penfold, members are able to access the pension provider’s award-winning digital app as well as receive £25 for starting an account with them.
IPSE and CMME launch manifesto
Following joint research we commissioned with CMME into mortgages late last year, we both released a manifesto calling on the government and the financial services industry to end the discrimination against the self-employed.
The manifesto called for the end to mortgage discrimination against self-employed workers through four key steps:
- Government and the mortgage industry should work together to explore tailored products and ways of making it easier for the self-employed to successfully apply for mortgages
- Mortgage lenders should ensure that their advisers are fully trained to understand the self-employed sector and their financial situations.
- Government should ensure that self-employed people who have made use of mortgage payment holidays, the SEISS scheme or the job retention scheme, are able to access other loans in future without being penalised
- Modernise the tax and employment system to make it easier for lenders to assess freelancers’ financial situations and de-risk them as customers.
You can read more about the manifesto below:Read more
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