The Autumn Budget: what it means for the self-employed


IPSE has spent most of today looking out for the implications of the Autumn Budget on IR35, and we have posted an in-depth analysis on our site. Shortly, we will be posting a full review of the other tax changes likely to affect independent professionals there too.

Beyond tax laws, however, there are also a number of other issues in today’s Budget that independent professionals and the self-employed need to be aware of:

Taylor Review and employment status

As IPSE expected, in response to the Taylor Review the government announced it will shortly publish a discussion paper exploring reforms ‘to make the employment status tests for both employment rights and tax clearer’.

This is an area ISPE will be closely involved in. We will continue to call for a statutory definition of self-employment to deliver greater clarity for individuals and engagers. We also believe that Taylor’s recommendation that tax and employment status should be more closely aligned makes sense and that the government should press ahead implement this.

Training for the self-employed

The Chancellor also promised investment to help people retrain. This is a welcome acknowledgment that investing in new skills is essential for keeping pace with the changing nature of work. This will entail a government consultation on extending the scope of tax relief available to the self-employed – as well as employees – for work-related training costs.

IPSE welcomes this news. We will respond to the consultation and make the point that the government needs to make training for new skills tax-deductible for the self-employed – just as it is for employees. The Chancellor also announced £30m to develop distance learning courses for digital skills. This investment could be good news for the self-employed, who often prefer the flexibility of online training to structured, face-to-face courses. 

IPSE is also pleased to see the Chancellor’s call to review how the Apprenticeship Levy can be spent. Currently, the fund cannot be used to enhance the skills of the self-employed – even though many employment agencies, who predominantly have self-employed people working through them, have to pay the levy. As part of the review, IPSE will call for the Apprenticeship Levy to be made available to enhance the skills of the self-employed.

Universal Credit

After receiving sustained criticism for how Universal Credit (UC) is hitting low earners, the government has listened and is spending £1.5 billion on tackling the problems – including removing the seven-day waiting period and extending the repayment period for advances.

IPSE is disappointed, however, that the Chancellor didn’t address the problems that UC causes for the self-employed. In short, the operation of the minimum income floor fails to consider the fluctuating earnings of the self-employed and the fact that new businesses typically take time to become profitable. To allow the self-employed to establish themselves and grow their businesses, IPSE believes the minimum income floor should not apply to businesses in their first two years of trading and should be applied on an annual basis.

Broadband/infrastructure

£385 million has been committed to projects to develop next generation 5G mobile and full-fibre broadband networks. This investment is vital for the UK’s self-employed population – especially those who live in rural areas and still don’t have access to a superfast broadband connection. Research shows that as many as one in five self-employed workers in Scotland and Wales, for example, have said broadband issues are one of the biggest problems for their businesses. The UK cannot afford the productivity losses this causes.

Parental leave

The Budget failed to remove the discrepancies in parental pay, which penalise those who choose to work for themselves. Self-employed women do not have the right to 90 per cent pay in the first six weeks of the maternity period, as employed women do. Instead they receive a flat rate of pay throughout the maternity period.

The self-employed are also not entitled to shared parental leave and there is currently no paternity leave for self-employed men. This system unfairly places the entire burden of childcare onto self-employed mothers. With the number of freelancing mothers up by 80 per cent since 2008, IPSE urges the government to rethink this antiquated policy.

Housing

Central to the Chancellor’s Budget speech was his commitment to build more homes and solve the housing crisis – a £1.5 billion extension to the Home Building Fund was announced, as well as a £630 million commitment to build projects on small sites. Mr Hammond will have to bear in mind that it will be self-employed construction workers who will play a vital role in delivering on this ambition. He will therefore need to think closely about how training in the construction sector can be delivered, as well as whether the failure to abolish Class 2 National Insurance Contributions will hurt the self-employed in this sector.
 

 

Meet the author

Jordan Marshall

Policy Development Manager