Crumbs of comfort in an otherwise gloomy Budget
At today’s Budget the Chancellor celebrated the UK’s record level of employment, before hiking self-employed National Insurance and cutting the Dividend Allowance, thus directly hitting the group largely responsible for this growth. But amid the gloom there were two crumbs of comfort for the UK’s 4.8 million self-employed.
Making Tax Digital
Last year the Government set out its ambition to transform tax administration by 2020 for all businesses so it is more effective, more efficient and simpler for taxpayers through Making Tax Digital. So far, so good but then we learnt the details, which included mandatory quarterly tax returns through software or apps. IPSE raised a number of serious concerns about the proposal, including compliance costs and increased accounting fees. Despite opposition from much of the business community, HMRC will be pushing ahead with reforms. However, they did listen to our calls to delay the roll-out of Making Tax Digital to businesses and landlords with turnover below the VAT threshold (£83,000). This may not be much, but it will give many self-employed another year (until April 2018) to prepare their businesses (and their accountants!) for the change.
The self-employed are not treated equitably in the state benefit system compared to the self-employed. In our 2015 Manifesto, and as part of our work with Julie Deane OBE in her independent review into self-employment for the then Department of Business, Innovation and Skills, IPSE urged Government to equalise maternity and paternity benefits for the self-employed. Today the Chancellor announced a review into the issue, which we greatly welcome. IPSE will be standing up for self-employed families and supporting the one in seven freelancers who are working mothers by calling for ‘maternity allowance’ for the self-employed to be brought in line with ‘maternity pay’ for employees. Our recommendation appeared in the APPG for Women and Work’s Annual Report, Women Returners, which was welcomed by the Prime Minister today which, as well as the Budget, was also International Women’s Day.
IPSE called for these measures and we are very pleased the Government has acted, but the overall picture remains concerning. The self-employed are the engine of the UK economy. They help businesses to be more innovative and to manage peaks and troughs in demand. If the Chancellor wants to know what our labour market would be like without them, he need only look across the Channel to France where the impacts of an inflexible labour market are plain to see. So thank you, Chancellor, for the period of grace on Making Tax Digital, and thank you for agreeing to look at maternity and paternity pay, but let’s not lose sight of the big picture. We need the self-employed and we are lucky to have them. It would be nice if that message were reflected in the next Budget in the Autumn.Finance, Tax, Employment, HMRC, IPSE News