Autumn Budget 2021: Good for creatives, could be much better on freelancers

Autumn Budget 2021 looks ‘good’ for the creative industries at the macro level, but ‘could do much, much better’ for individual creatives who freelance as self-employed sole traders.

This is the report card-style verdict coming back on the chancellor’s third Budget from both creative bodies assessing Rishi Sunak’s measures, and advisers quizzed by FreelanceUK.

The ‘good’ assessment is based on Mr Sunak yesterday doubling the amount of tax relief available between now and until April 2023 for museums, galleries, theatres and orchestras.


Museums and galleries were due to have relief expire in March, but given they are “starting to tour again,” said the chancellor, nodding to the pandemic, he extended it until 2024.

Also good, signalled the Creative Industries Federation (CIF), is the Budget’s £850m in post-pandemic aid for cultural and heritage outfits, plus £42m in “scale-up” help for creative SMEs.

Some of that £42m (the equivalent of £14m a year), will go on supporting small and mid-sized enterprises in the film and video games industries, states the chancellor’s Red Book.

'High-skilled migration is key'

But despite it being part of Mr Sunak’s welcomed boost for the creative industries, TIGA, the network for games developers, says it really wanted games tax relief hiked from 25% to 32%.

The network’s CEO Dr Richard Wilson also said that for the creative industries as a whole, a “key” measure from the chancellor yesterday was a programme for “high-skilled migration.”

Visas to help creative sectors with staffing issues were earmarked as a priority in a Spending Review submission to Mr Sunak by the Policy and Evidence Centre (PEC) at Nesta earlier this month.

'Reliant on freelancers'

But despite yesterday’s Budget trumpeting three visas (for which highly-skilled applicants will need a £33,000+ salary job offer), the innovation body's PEC says that, regretfully, it has heard it all before.  

“This Budget trails again the Scaleup, High Potential Individual and Global Business Mobility visas,” tweeted PEC's head of policy Eliza Easton.

“But we need clarity on how these will work for areas like design [which are] highly reliant on freelancers, but not often mentioned alongside Science and Tech.”

Meanwhile, a new expansion of R&D is similarly still within the helping hand for the creative industry which both CIF and Nesta's PEC commended the chancellor for yesterday.

'Limited R&D reform'

Yet not unreservedly. Caroline Norbury, the federation’s CEO called the expansion of qualifying R&D expenditure -- to cover data and cloud computing costs -- “limited”.

And also not sounding elated, Ms Easton said it was a “shame” that Autumn Budget’s widening of the scope of R&D did not extend to other types of “content development.”

Mr Sunak sounded bullish however. In fact, the chancellor roared to the House of Commons yesterday that the government would be increasing overall public R&D investment to record levels.

'Imagination, drive, risk-taking'

He was likewise upbeat about broadband, citing the government continuing its £5bn investment to support the rollout of gigabit capable broadband in “hard-to-reach” areas.

Even more vocally, and almost throughout his hour-long speech, the chancellor saluted people like the self-employed who strive in business, alone and for themselves.

In particular, he praised individuals who take ‘risks’; who have “imagination,” who have “drive” and in working for themselves, are “innovative.”

'Missed opportunity'

But here is where the score card for Mr Sunak slips from ‘good’ to ‘could do much much better’ because his words in favour of those who go it alone failed to match his actions.

“This Autumn Budget was a missed opportunity to help the self-employed, especially those that have been excluded during covid,” IWORK founder Julia Kermode told FreelanceUK.

“In many ways, this important event was a non-event for freelancers because, while there were no new punitive tax policies, there were hardly any initiatives to help them either.”

'Far too little for self-employed'

“There is far too little in the Budget that would directly support the self-employed,” agrees IPSE chief executive Derek Cribb.

“We are grateful there were no new tax rises, but disappointed the chancellor didn’t take the opportunity to further simplify and reduce working taxes.”

Aware self-employed national insurance is already set to increase due to the Health & Social care levy, two advisers to freelancers are more unforgiving of HM Treasury’s boss.

'Sunak spending money he doesn't have'

“Sparing the self-employed in this Budget speech doesn’t paper over the cracks [because] these workers are bearing the brunt of short-sighted, quick-fix tax reforms that endanger this vital cog of the economy, rather than support it,” hit out Qdos CEO Seb Maley.

Graham Webber of WTT Consulting echoed: “[Already planned] tax rises amount to some £50bn a year and fall disproportionately upon the self-employed and those who use dividends as a reward for their labour.

“[Nonetheless] Rishi Sunak enjoyed his hour or so…happily spending money he doesn't have, and totally ignoring these previously announced tax rises. 

“It's hard to think that there is not a…campaign being waged by HM Treasury which is seeking to tax freelancers out of the UK economy.”

'Cash flow drain'

An analysis of Autumn Budget by Moore Kingston Smith reveals that individuals operating as sole traders will see the so-called basis period reform go ahead.

According to the accountancy firm, the reform means that from April 6th 2024, such unincorporated businesses (including partners in partnerships) will have their trading profits taxed in the tax year they arise rather than at the accounting period ending the tax year.

“For some, this will accelerate tax charges and will place a drain on cash flow,” the firms’ head of tax Tim Stovold told FreelanceUK.

“However it was inevitable that this was coming, and the delay of a year is the most that could have been hoped for.”

'Less in their pockets'

Elsewhere at Autumn Budget, Mr Stovold said the tax thresholds and the personal allowance for 2022/23 were frozen by the chancellor at the same level as the current tax year.

“Although this is not a tax increase as such, the impact of inflation driving headline earnings up will mean that more people will creep into the 40% tax bracket,” the accountant warned.

“Furthermore, the additional 1.25% charge on dividends and the national insurance rates will mean that people will have less in their pockets to spend.”

'No indication'

Also sounding concerned for freelancers’ bottom lines is Mr Cribb, the CEO of the Association of Independent Professionals and the Self-Employed (IPSE).

“We had a promise [from the chancellor] that tax would come down by the end of the Parliament but no indication of exactly how,” he said.

“Funding [from Mr Sunak for investment in training and skills] should be made more flexible, so the self-employed can choose which training is right for their businesses.”

'No reassurance, but at least penalised less'

Downbeat, and all but marking the chancellor down for his lack of offering to freelancers, Mr Cribb added: “Overall, this Budget does nothing to reassure the UK’s 4.3 million self-employed businesses, who are reeling from a series of setbacks, from gaps in [covid] support to disastrous IR35 reforms.”

Finding a single, small upside, IWORK's Ms Kermode said: "Thankfully the chancellor did use his third Budget to reduce the 63% taper in universal credit, so for every £1 earned universal credit will be reduced by 55p instead of the current 63p. This means that those who need their income topping up, including many self-employed, will now be penalised less for working and earning money."


28th October 2021

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