Party manifestos 2017: what freelancers are promised
All three of the main political parties have now published their 2017 manifestos for the general election on June 8th.
The main pledges affecting self-employed, freelance and sole trader professionals are outlined below.
At a glance, Labour appears to be pledging the most to freelancers and the self-employed, given that an entire chapter of its manifesto is dedicated to “Self-employed Workers.’
However, not all of the focus will necessarily be universally welcomed by temporary, independent, atypical, contract and consultancy workers. For example, Labour pledges to:
- Ban umbrella companies.
Inaccurately describing umbrella companies as “payroll companies” (genuine umbrellas actually offer full employment rights like a conventional employer does), the pledge has disappointed swathes of the contractor, freelance and temporary work communities.
Critics say a ban would remove temporary employment -- which bonafide umbrellas offer -- serving as a ‘stepping stone’ back to full employment. Observers also point out that umbrellas are a way for aspiring business people to ‘dip their toe’ into specific industries safely and easily, rather than them having to ‘go it alone’ outright as a limited company. Such incorporated businesses exert higher administrative and compliance burdens on individuals than being a sole trader (an unincorporated business) or using a PAYE umbrella company.
However, ContractorUK reports Labour’s freelance ambassador Philip Ross as saying the proposed ban on brollies would help provide a labour market “that works for freelancers and their clients, not one that enriches agencies and umbrella companies.” His statement ties in with Labour’s manifesto tagline -- “For the many, not the few.”
And although Mr Ross was speaking in a personal capacity (not on behalf of Labour), he suggested the ban would help beat ‘bogus’ and ‘forced’ self-employment. In its manifesto, Labour seems to agree, saying umbrellas “create a false structure to limit employers’ tax liabilities and limit workers’ rights.”
Also in its manifesto, a Jeremy Corbyn-led government says it will:
- Exempt all small traders from Making Tax Digital.
- Shift the burden of proof, so that the law assumes a worker is an employee unless the employer can prove otherwise.
- Give recruitment agencies and end-users joint responsibility for ensuring that the rights of workers supplied via such agencies are enforced.
- Extend the rights of employees to all ‘workers,’ including shared parental pay (in line with calls by MPs).
- Set up a “dedicated commission” to modernise the law around employment status.
- Introduce new statutory definitions of employment status (in line with calls by freelancing body IPSE and the charity Citizens Advice).
- Not raise VAT or National Insurance Contributions.
In their manifesto, ‘Change Britain’s Future,’ the Liberal Democrats speak of their ambition to reform the corporation tax system so that it “benefits the smallest companies,” as opposed to their larger counterparts.
Also affecting small companies, a Tim Farron-led government says it will refocus Entrepreneurs’ Relief, reverse cuts in corporation tax (from 20% to 17%) and introduce a commensurate 1p increase in dividend taxation. It is not clear whether this 1p increase is what the Lib Dems mean by their pledge to ‘reform to dividend tax relief.’
The party’s other promises to single-person ventures, such as the self-employed include:
- Create a new ‘start-up allowance’ to help those starting a new business with their living costs in the crucial first weeks of their business.
- Improve the quality of vocational education, including skills for entrepreneurship and self-employment in schools.
- Offer mentoring support to traders who want to grow fast.
In their manifesto, ‘Forward, Together,’ the Conservative party emerge as unlike the two other main parties, because it explicitly mentions “freelancers.”
However, the acknowledgement is only to differentiate such self-employed professionals from ‘gig economy’ workers, who the party pledges to “make sure” are “properly protected. In particular, the Conservatives will “act to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected.” But it says it will not act until the Taylor Review concludes.
The Conservatives also pledge to:
- Continue to extend auto-enrolment (the government’s flagship policy on pensions) to small employers and make it available to the self-employed.
- Not raise VAT.
- Be a party of low taxation.
- Simplify the tax system.
- Keep its promise of increasing the personal tax-free allowance to £12,500.
There is no mention in the Tory manifesto of the reduced dividend allowance -- announced in the Budget in March but intentionally dropped from Finance Bill 2017. Making Tax Digital was also omitted from the bill. However, at the time of the bill’s passing, the government vowed to pass the omitted measures into law “at the earliest opportunity.”