Autumn Statement 2014 – Freelancers' Wishlist

The vast majority of freelancers will have a short and straightforward 'wish list' as we approach a highly politicised Autumn Statement, writes Derek Kelly of ClearSkyAccounting, an accountancy firm specialising in freelancers’ tax affairs.

George Osborne will tomorrow deliver his fifth, and potentially last, Autumn Statement. With the most unpredictable general election in decades now less than six months away, the chancellor will be acutely aware that his primary aim will be political rather than economic.

Expect to hear several references to the ‘long-term economic plan’ and the Conservatives’ desire to ‘secure the recovery.’ At this stage in the electoral cycle, we would normally anticipate some giveaways on tax and personal finance. However, Mr Osborne’s scope for action with regard to pre-election sweeteners has been restricted in recent months by growing concerns over global economic conditions and the potential impact on the UK’s recovery. Latest figures show the task of restoring our public finances to health is far from complete. Mr Osborne may yet pull a rabbit out of the hat, but significant giveaways seem unlikely.

So what can the UK’s growing army of contract, freelance and self-employed workers reasonably expect tomorrow? Here are three things I believe every member of the skilled, flexible workforce will hope to see from the chancellor.

1. Certainty over tax legislation

Changing the freelancer tax landscape is complex and takes time. Given that the coalition is highly unlikely to survive in its current form beyond May 2015, any new policies announced by the chancellor in this area will be little more than window dressing. In all likelihood they would ultimately amount to nothing, other than to create a period of uncertainty, anxiety and confusion for freelancers/contractors – not to mention the recruiters and clients they work with.

The industry will be hoping we don’t see anything similar to last year’s ‘ false self-employment’ proposals, which briefly caused panic among some limited company and umbrella company workers until HM Revenue & Customs made clear that neither group would be covered by the legislation.

As hard-working professionals who are simply trying to put their skills and expertise to use in order to make a decent living, freelancers value certainty, stability and continuity above anything else when it comes to their tax and financial affairs.

That’s why I personally am not hugely enthusiastic about IPSE’s call for a ‘Freelancer Limited Company’ structure to be created within the tax system. For me, such a change could create more problems than it solves – as well as reinforcing the notion that personal service companies (PSCs) are somehow different to other businesses.

It’s also why I believe very few will shed a tear when – as seems highly likely – the IR35 Forum’s long-awaited review stops short of recommending that the controversial legislation be scrapped.

Most limited company contractors recognise that, for all its flaws and shortcomings, IR35 serves a purpose. The focus now should be on education and fair, consistent enforcement. Abolishing or replacing IR35 would simply bring more upheaval – great for the lawyers, bloggers and advisors, less so for freelancers themselves.

Meanwhile, umbrella company workers will be hoping that Mr Osborne does not respond to Labour’s misguided plans for a ‘crackdown’ on umbrella companies by unveiling proposals of his own.

2. Empathy and respect

What do freelancers, contractors and the self-employed want from politicians? Fundamentally, it’s the same thing that any group or individual wants: a sense that their concerns are being listened to and understood. It’s a sense that our elected representatives have empathy with their motivations and frustrations. Market conditions for independent professionals will never be top of the political agenda – we all know that – but greater recognition and understanding would be very welcome.

Happily, recent months have produced several encouraging signs that the UK’s freelancer population is now too big for the main parties to ignore. Self-employment was a theme of the party conference season, with both Labour and the Conservatives acknowledging the economic contribution of those who go it alone. The appointment of David Morris MP as the UK’s first ever ambassador for the self-employed - aptly announced on National Freelancers Day – was another important milestone.

Also on National Freelancers Day, broadcaster Declan Curry was spot on when he said during his keynote address that freelancers and contractors have too often been “invisible in the corridors of power”. Hopefully the appointment of Mr Morris will go some way to address that.

With the government making positive noises, Mr Osborne could use Autumn Statement to make an announcement regarding the introduction of maternity pay for self-employed mothers. It may be difficult at first glance to see how this would work in practice, but a pledge would at least demonstrate that policymakers are finally taking professional freelancers’ concerns seriously.

3. Measures to boost key sectors

Freelance, contract and self-employed professionals will be hoping that Mr Osborne’s desire to secure the business vote next May will see him unveil a raft of pro-enterprise measures next week. Supercharging the R&D tax credit – a measure the CBI has called for – would boost manufacturing and engineering firms, potentially increasing demand for freelancer and contractors working in those industries.

Along with the CBI, the British Chambers of Commerce and manufacturing body the EEF are calling for infrastructure investment to be prioritised. Meanwhile industry body Oil & Gas UK has called for tax cuts and the reform of allowances to encourage development and exploration – music to the ears of contractors for whom North Sea firms are a rich source of assignments.

Mr Osborne has previously shown willingness to support fledgling and high-growth industries, such as shale gas and video games, and may well take similar action next week.

The author, Derek Kelly, is also the managing director of Parasol, part of Optionis.

 

1st December 2014

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