Value of self-employed must be recognised, not diminished by punitive taxes

IPSE has responded to an IFS report suggesting the self-employed benefit from an unfair tax advantage over their counterparts in employment.

Chris Bryce, IPSE CEO commented:To suggest the self-employed are somehow operating to the detriment of other workers is ludicrous. It’s no coincidence that as the numbers of self-employed have risen, we’ve drawn closer to full employment overall.

“The flexibility of the UK labour market is one of our strongest competitive advantages, which is particularly valuable as we negotiate our exit from the EU. Research from Kingston University showed freelancers alone – who make up around two in five of the wider self-employed population – contributed £109 billion to the UK economy in 2015.

“It seems that the IFS, like many others, have totally failed to recognise the huge differences between employment and self-employment. Working for yourself means taking on all the risk - you get no sick pay, no paid training, no employer pension contributions, no big company benefits, and no guarantee of another job when your contract is complete. Despite this, the IFS report suggests more punitive taxes should be applied to the self-employed.

“A raft of tax measures have been introduced over the past few years which specifically target this group. The restriction of tax relief on travel and subsistence expenses, the tightening of rules on intermediary reporting and the forthcoming changes to IR35 legislation in the public sector have all made life increasingly difficult for the UK’s self-employed workforce.

“The report comes at a time when the labour market’s unique flexibility, which helped the UK to weather the storm of the recession, is at risk. Businesses’ ability to react to peaks and troughs in demand is severely under threat as a result of shortcomings in the tax system and fundamentally flawed assumptions. IPSE agrees that the UK’s tax system is far from perfect and needs a total overhaul. Our system is based around a 19th century way of working and we need to start thinking for a 21st century world.” 

Tax, Research, Policy

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