What freelancers need to know about Rishi Sunak and Liz Truss
Time is running out. In less than one month, Conservative Party members will either choose the foreign secretary Liz Truss or the former chancellor Rishi Sunak to be prime minister – so a new policy boss for freelancers and the self-employed, writes Andy Chamberlain, director of policy at IPSE.
Opening up the gulf
While both candidates have been in the cabinet, their visions for the country are widely unknown by the Conservative Party and the wider electorate. In fact, for many, the leadership campaign has been their first time to properly see what either Rishi Sunak or Liz Truss wants to do with the country.
So far, the leadership campaign has opened up the gulf in opinions between Truss and Sunak on tax, immigration, Brexit and a number of other issues. However, despite a series of televised debates, interviews, and op-eds, there are still question marks over what both candidates would do to help the self-employed.
Both Truss and Sunak have failed to mention the issues plaguing thousands of freelancers, such as the troubles around IR35 and the confusion around the employment status of self-employed workers.
Here at the Association of Independent Professionals and the Self-Employed (IPSE), we hope that they will outline their thoughts on these crucial issues in the final weeks of their campaigns.
However, until then, here is an overview of what a Rishi Sunak or Liz Truss-led government could mean for the UK’s self-employed:
Liz Truss: a backer of the self-employed?
Despite losing to Rishi Sunak in the first round of debating, Liz Truss is the bookie's favourite to replace Boris Johnson as PM. She has wide support in the Conservative Party and has a reputation for being in favour of low taxes and a small state. Both of those most private sector freelancers will get behind.
As prime minister, it is likely that Truss would want to follow through on her campaign rhetoric and cut National Insurance and corporation tax. While there are questions from economists on whether this would exacerbate the inflation crisis, it is clear that any tax-cutting measures would put more money into the pockets of self-employed freelance workers -- who are only just recovering from two years of debt and uncertainty during the pandemic.
The very latest suggestion from Truss’s camp, is that a Truss-led government would reduce the Sunak-announced planned increases in corporation altogether, halting the 19% to 25% increase. For high-end freelancers with profits of over £50,000 – the threshold above which the increase would apply – this will be a welcome promise.
Given her general attitude around tax, we also hope that Truss would look into IR35. The flawed reform to off-payroll tax has caused mass uncertainty and confusion for hirers and self-employed workers alike. It has put the burden of determining notoriously complex employment status decisions onto companies and has resulted in more than a third of freelancers (35%) closing their businesses since the April 2021 changes.
Rishi Sunak: the SEISS architect who also imposed IR35 reform
Compared to Liz Truss, the former chancellor Rishi Sunak’s views are more well-known. He helped steer the economy during the pandemic and is known by the wider public for furlough and the introduction of the Health and Social Care levy.
For self-employed workers, Sunak’s time as chancellor was a mixed bag. While he supported freelancers during lockdown through the creation of the Self-Employment Income Support Scheme (SEISS), there were a number of flaws in the scheme which meant that many workers were left without crucial support during the pandemic.
Some four million other independent workers – who each operated through their own limited company – went even more without, getting no scheme from the then-chancellor which was dedicated to them, despite a scheme designed to specifically support directors being drawn up and sent to HM Treasury.
Sunak’s tenure as chancellor is probably even more heavily tarred by one policy which he did oversee -- the rollout of the controversial reform to off-payroll tax, IR35.
As PM, Sunak would want to build on his policies as chancellor. He is unlikely to reverse the IR35 changes and instead he would continue to follow through on the Health and Social Care levy, the recent cut to Business Asset Disposal Relef (formerly Entrepreneurs’ Relief) from £10million to £1million, and the freezing of tax allowances until 2026. He is also unlikely to cut taxes straight away -- on the basis that they could exacerbate the recent rise in inflation.
The new PM won't be able to duck self-employment, because us freelancers aren’t going anywhere
Regardless of who wins the race to Number 10 Downing Street, the next prime minister will have to deal with the self-employed. Despite the end of the coronavirus pandemic, the freelance work sector remains in a precarious position. Numbers of self-employed workers are yet to reach pre-pandemic levels and uncertainty around the cost of living crisis and IR35 continue to plague freelancers.
Going forward, as prime minister, Rishi Sunak or Liz Truss need to intervene to help the self-employed reclaim their position as one of the most innovative and dynamic parts of the UK economy. If not, they will find that the entire economy will suffer, as businesses are left without the skills and expertise that thousands of freelancers provide to organisations everyday.
9th August 2022