Five measures can boost freelancers at Autumn Budget, chancellor told
Five ‘freelancer-friendly’ measures to boost the UK’s self-employed could help sole traders “turn the page after a torrid 18 months.”
Delivering this message to chancellor Rish Sunak, ahead of his Autumn Budget 2021, the UK’s largest business support group said the five were part of its “pro-growth, pro-business and pro-jobs” wish-list.
Only four of the five measures proposed by the group, the FSB, specifically reference the ‘self-employed,’ but even the outlier could help freelance sole traders whose turnover is on the cusp of £85,000.
'Stop work two months early'
“It is well-acknowledged that small businesses below the VAT threshold reduce their economic activity to ensure that they do not cross this threshold and become liable to the tax…[some even] stop work two months early,” the group tells Mr Sunak.
So the chancellor’s package on October 27th should contain a green light to set up a “commission” to consider the economic impact of raising the VAT allowance to £100,00.
The Federation of Small Businesses explained: “Assessing the behavioural and economic impact of removing this barrier to growth would help access the potential benefits of raising the threshold, and introducing a smoothing mechanism [would help] so firms only gradually become liable for VAT.”
'Exposure to income shocks'
A similar “call for evidence” is needed to determine the potential for measure two – a new HMRC scheme to let freelancers smooth their income tax liabilities over a three-year rolling average.
Sounding aware of the covid-19 pandemic’s impact on the self-employed, the federation added that the scheme would be a “way of limiting exposure to shocks to their income, if they were able to offset losses on the previous two year’s gains.”
“Three quarters of small businesses struggle to accurately forecast their earnings each year and state that their financial security fluctuates,” says the FSB’s 30-page submission, applicable to both Spending Review 2021 and Autumn Budget.
“Looking backwards, where a year’s income exceeds the three-year average, that effective overpayment could be considered a tax credit towards liabilities in years where income is below average, thus smoothing overall liabilities.”
'You can't Build Back Better'
Income being below average for freelancers, who last month admitted to cutting their rates by £48 simply to secure work, is on the mind of Liberal Democrat MP Tim Farron.
“You can't 'Build Back Better' by cutting the incomes of low paid workers and the self-employed, having already excluded millions of them from covid financial support, and then hiking their national insurance contributions,” the former Lib Dem leader said, in a Twitter snipe to Boris Johnson following the PM’s Tory party conference speech last week.
In a nod to the need to aid the recovery from the pandemic, the FSB says Mr Sunak should require 50 per cent of the National Skills Fund spent on employees to be spent on training for business owner-managers, including the self-employed.
'Millions denied financial support'
The FSB’s fourth proposed measure is for the chancellor to introduce an Adoption Allowance for the self-employed, and the fifth, is for him to launch a review on access to mortgages for the self-employed – at the heart of the Tory party manifesto, pledged in 2019 but yet to be acted on.
Other exclusions aren’t going unnoticed either. “[The Conservatives’] deliberate policy decision to deny millions from financial support during the pandemic showed their true colours towards small businesses, freelancers and the self-employed,” posted lobbyist the EUA Campaign.
Equally hoping for a fix for the tiniest traders is Independent Business Network.
Sounding concerned about the prospects for the recovery, and where freelancers might fit into associated policy decisions, IBN said yesterday: “Inflation is rising, and this will damage business, employers and self-employed people.
"We need the government to take action to deal with this quickly so our recovery is not derailed.”
15th October 2021