Budget offers nothing to freelance businesses despite “unprecedented financial crisis
Budget offers nothing to freelance businesses despite “unprecedented financial crisis

PCG has expressed its deep disappointment at the Chancellor’s failure to provide any assistance to the UK’s 1.4 million freelancers.

“The Chancellor has ignored the need to remove barriers to enterprise at this time of, in his words, ‘unprecedented financial crisis’,” commented PCG’s managing director John Brazier. “The UK’s freelancers will be asking where are the helpful measures such as the repeal of IR35 and other distorting tax laws like s44-7; they will be sorely disappointed again by the lack of answers.”

Corporation Tax for small firms will not be reformed, following the consultations to which PCG contributed earlier this year and last. The Chancellor did however refer to businesses who are ‘benefiting’ from his decision in the Pre-Budget Report to delay the last of the small firms’ CT increases planned by his predecessor, Gordon Brown. Freelancers who are obliged to use limited companies because of the distorting effects of tax rules will regret that he has not decided to cancel the increase altogether and that it will be introduced in 2010/11.

Regarding income tax, the number of freelancers affected by the new top income tax rate of 50% on income over £150,000 and the restriction of personal allowances for incomes over £100,000 will be small: less than 10% for the former and less than 30% for the latter, though clearly the allowance changes will still be significant for many. 

PCG will be seeking clarification of why there is no confirmation that the Finance Bill will contain an enabling clause to put the new HMRC Charter in statute, despite the Chancellor’s promise to do so at the PBR.

PCG is also concerned at the proposal for HMRC to publish the names of taxpayers who have “deliberately understated” more than £25,000 of tax. Will this mean that victims of IR35 investigations will have their reputations smeared by HMRC? Such action would be wholly unnecessary. PCG will be asking for assurances from the Government about this and other plans to strengthen HMRC’s arm.

A further announcement of potential significance was the proposal for new legislation to tackle “false self-employment” in the construction industry. PCG repeats its position that legislation is needed to clarify general employment status in the UK, and not just tax law to cope with the revenue consequences of the current mess.

John Brazier concluded: “The UK’s freelancers are a vital resource for businesses who are trying to spearhead the recovery, and need to bring new skills on board quickly; their importance will only grow as we climb out of recession.”

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