How might The Taylor Review affect UK self-employment?

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After nine months in making, the long-awaited Taylor Review into Modern Working Practices was released to the public earlier this week. And as expected, there was plenty of focus on the role of freelancers and contractors in the new economy, along with suggestions on how the Government can build an environment in which any kind of worker can thrive.

Cutting to the chase, it was a mixed bag for freelancers and contractors, with a growing feeling that while the review clearly understood the strength and importance of the UK’s flexible workforce, it did not offer many new ideas for Government to consider implementing.

Support the UK’s ‘special’ self-employed workforce

“It is time the Government reconsidered how self-employment is treated and what it can do to support those who choose to be their own boss.”  The Taylor Review

Given that recent Government plans for the self-employed have come under huge scrutiny, anything to urge Theresa May and her Cabinet to reconsider their support for this UK’s independent workforce will be widely welcomed.

Seb Maley, CEO of Qdos Contractor, adamantly agreed.

“The new-look Government has an opportunity to rethink the support they offer to the UK’s 2million freelancers and contractors. This should start with a change in attitudes towards the self-employed, some of whom - particularly contractors - have been unfairly tarnished as tax-avoiders.

“The majority of independent professionals choose to work for themselves to enjoy more freedom and a better worklife balance, not to unfairly exploit the current tax system. Furthermore, in the case of contractors, the majority have been forced to incorporate because of the demands of big business.”

Balance the tax-system

Recent changes to public sector IR35, along with the slashing of tax-free dividends have outraged the UK’s independent workforce, who feel as though the benefits of working this way are slowly being removed.

“Currently, the different rates of National Insurance in particular mean that the UK system of taxing labour is not neutral – a self-employed person doing the same work as an employed person can pay a different amount of tax or National Insurance despite receiving similar contributory benefit entitlements in return.” The Taylor Review

The Taylor Review calls for National Insurance Contribution to be the same rate for employees as it is for the self-employed. And while the report recommends that the companies engaging self-employed workers could in-fact pay self-employ workers’ NIC, any move towards balancing the tax system is not expected to be popular among freelancers and contractors, regardless of whether employers were to pick up the bill.  

“The self-employed simply do not enjoy the same benefits as employees, so to call for a balanced taxation system, seems shortsighted”, argued Qdos Contractor’s Seb Maley.

“While the review suggests companies engaging with self-employed workers could perhaps make these NIC contributions themselves, many contractors would feel as though an element of their independence was being taken away. The beauty of the flexible workforce is that both contractors and companies benefit from a completely flexible working relationship,” he added.

End employment status confusion

 As the IR35 debacle rolls on, The Taylor Review urged for simplification and clarity around employment status.

“The way in which employment protections are applied relies on individuals and employers understanding the type of relationship that exists between them – most basically, deciding whether the individual is an ‘employee’, a ‘worker’ or genuinely self-employed. For a number of reasons, this is becoming more complex for an increasing proportion of the workforce.” The Taylor Review

So it’s simple. For contractors and public sector engagers to truly understand and make more accurate, well-informed decisions on employment status, there is a need for clarity. Put politely, the current situation is confusing, and contradictory as to whether a worker should be considered an employee, or self-employed.

Andy Vessey, Head of Tax at Qdos Contractor welcomed the recommendation; “Status tests should be more distinct and not open to wide interpretation, so as to give certainty to both worker and engager.”

The review calls for change in legislation, to ensure Government, the courts, workers, employers and agencies are – metaphorically speaking – on the same page. It emphasised the need for key factors which the Government typically use to make employment status decisions, to be incorporated into the legislation.

They key factors include; Personal Service (which is judged on whether the individual is required to do the work themselves), whether a working arrangement falls under SDC – Supervision, Direction and Control, and Mutuality of Obligation (which considers the contractual agreements the worker must keep to).

Protection for ‘gig economy’ workers

The incredible rise of gig economy workers, and self-employed workers such as Uber drivers, Amazon deliver drivers, Deliveroo and JustEat riders, led to the Taylor Review to suggest a measures to protect a new type of worker; the ‘dependent contractor’.

“Government should introduce a new name to refer to the category of people who are eligible for “worker” rights but who are not employees.” The Taylor Review

The general response from leading industry voices, is that the review was right to recognise ‘gig economy’ workers. But it cannot be stressed enough that in the vast majority of cases, these workers have a very different set of characteristics and needs compared to your typical, genuinely self-employed freelancer or contractor.

“When people talk about the gig economy, there is often the mistaken assumption that the services operating in it are all the same. Each relationship has to be judged on its own particular merits, and it would have been a huge error to simply place everyone in the gig economy within the revised worker status. This is why it’s essential to enshrine what it means to be self-employed in law.

“Renaming workers ‘dependent contractors’ might bring some benefits, but government will have to be absolutely clear who falls into this group. It will still be up to the courts to rule on employment status,” explained IPSE’s Director of Policy, Simon McVicker.

While the review is right to touch on the evolution of the labour market and in it, the rapid-growth of ‘gig economy’ workers, The Taylor Report overlooks what is perhaps a more pertinent issue; the need to redefine ‘self-employment itself:

“It’s essential that Government refines its own definitions of self-employment, so everybody’s thinking is aligned. Policymakers must then put the Taylor Review’s recommendations into action. The Government-commissioned Deane Review on self-employment, which made a number of suggestions for better policy last year, has thus far been ignored. The Taylor Review has to be different,” Simon McVicker urged.

 What did you make of The Taylor Review of Modern Working Practices?

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How to get paid on time as a freelancer.

Words, hubbul

For freelancers, contractors and the UK’s 5million or so self-employed people, being paid late – and often late – has unfortunately become inevitable. And without the deep pockets of big businesses, late payment can often spell disaster for the cashflow of the UK's independent workforce.

As many as a third of payments to micro and small businesses in the UK are late, according to The FSB. 37% of those paid late run into cash-flow difficulties, while 30% of freelancers, contractors and other micro and small businesses have even been forced into a business overdraft because of unpaid invoices.

A concerning 20% of freelancers and small businesses have recorded a slowdown in profit growth too, solely because of late or unpaid invoices. So needless to say, late payment is an epidemic in the UK, and one which the new-look Government must resolve. It’s in the Government's own interests to do so too, with the end of late payment estimated to boost the annual economy by £2.5billion.

Given that 79% of small businesses do not charge interest on overdue invoices, the UK’s self-employed are by and large suffering in silence, and without any form of compensation. It comes as no surprise that big businesses are the worst offender either, contributing to 61% of all late payment to small businesses.

Until a prompt payment law is enforced, with the offenders penalised, there is only so much freelancers, contractors and small businesses can do to combat late payment. That said, there are a handful of tactics to lessen the likelihood of being paid late, and to speed up any outstanding payments without jeopardising valuable client relationships.

1) Shorten payment terms

Try shortening your payments terms from 30 days down to 14. If your client fails to pay within a fortnight, you’re well within your right to chase them for payment immediately, theoretically speeding up your payments somewhat.

2) Invoice instantly

By invoicing instantly and the moment you finish a job, you’ll benefit from something called ‘recency bias’ explains Ivo Weevers, Founder of Albert – a free mobile invoicing app. With you and your invoice fresh in mind, your client will prioritise your invoice, or so we’re told.

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3) Request a deposit

Outline your terms of working, and request a deposit before you start a project. This is by no means unheard of, and will help you keep a healthier cashflow – particularly if the final payment ends up being paid late. Consider requesting between 30 and 50% up front, before starting a job. 

4) Draw up a contract

On being signed by both parties, a contract becomes legally binding. Draw up a detailed contract outlining the project, the timeframe, the fee and the payment terms. If you suspect your client will be a late payer, you might want to detail that interest will be payable on any unpaid invoices. Weigh up the nature of your client first however. General guidelines on interest on late commercial payments can be found here.

5) Automate payment chasing

Stop wasting precious time and energy chasing invoices. Whether you use FreeAgent, Xero or many of the accounting softwares out there, let technology to the hard work and remind the client that an invoice deadline is approaching. Invoice through your accounting software and more often than not they’ll automatically remind clients and chase late payments – saving you time and what can pose to be a difficult conversation.

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6) Talk to the right person

Often your direct client contact will not be the one in charge of paying your invoice. Getting hold of a contact from your client’s accounts department is a smart move. After all, they will be the person paying you.  

7) Consider action

If all else fails and you’ve exhausted all options, legal action might be your only option. Unless agreed otherwise, payment is considered late after 30 days. The UK Government website will guide you through the ins and outs of legal action, here.

What tips do you have for speeding up the payment of invoices?

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The 10 best cities in the world to freelance.

Words, hubbul

The rise of freelancing, contracting and the flexible workforce is seemingly unstoppable, as our way of working continues to ingrain itself into new cities and societies across the world. And the entire makeup of the global workforce has changed dramatically, as millions of us go in search of more freedom, choice and independence in the way we work.

As the global workforce fundamentally changes, so do the cities accommodating this new wave of worker. From flexible office solutions and thriving coffee-shop-cum-coworking spaces, to super-fast fibre-optic broadband services, cities around the world are increasingly built to attract ambitious freelancers and disruptive startups.  

And as the cost of living in super-cities like London, New York, Tokyo and Singapore continues to rise, the new generation of worker is beginning to think outside the box, choosing to live in and work from affordable, developing cities.

So, here are the best 10 cities from around the world for freelancers, ranked on cost of living, job opportunities, lifestyle, safety and internet connectivity.

10. Porto, Portugal

Portugal’s second city, Porto, is fast-becoming a freelancer and startup hub, growing out of the shadow cast by the Portuguese capital, Lisbon. With stunning beaches, all year sunshine, low cost of living and ranking highly in safety, Porto sneaks into the top 10 cities for freelancers.

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09. Vancouver, Canada

Liberal and with a growing and diverse population of skilled, professional workers, Vancouver is a city which welcomes freelancers and innovative startups. Enjoying sun and snow, independent workers heading to Canada can benefit from accommodating visas.

08. Bratislava, Slovakia

A surprise entry, Bratislava is quickly becoming a go-to for many of Europe's tech freelancers, contractors and startups. The city has been rejuvenated by Eastern Europe’s tech boom, enjoying super-fast internet, a very low cost of living and the lowest rate of tax in all of the cities on this list.

07. Marseille, France

The small, charming city of Marseille offers a great quality of life for freelancers and contractors looking to escape the hectic nature of life in the big cities. With a growing coffee-shop culture, enjoyable nightlife, decent internet connectivity and transport links, Marseille is a popular destination for those in search of a better worklife balance.

06. Bristol, UK

Bristol often flies under the radar, overshadowed by London, Manchester, Leeds and Birmingham. But not for much longer. With a young, exciting and predominantly creative population, the city has an abundance of coworking spaces and startup accelerators, not to mention a coffee-shop culture that's hard to rival.

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05. New Orleans, US

Arguably the Deep South’s most celebrated city, New Orleans has all the ingredients for a brilliant worklife balance. Throw in its unique and growing community of freelancers and digital nomads, and it’s easy to see why this Louisiana city is ranked the 5th best city in the world for freelancers. And that’s before we get onto the year-round sunshine...

 04. Las Palmas, Spain

The capital of Gran Canaria, one of Spain’s Canary Islands is perhaps the biggest surprise on this list. Visit the island however, and you’ll begin to understand why it’s rated so highly; stunning scenery, a close expat and immigrant community and non-stop sunshine.

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03. Seville, Spain

Another Spanish city, Seville has a lower cost of living compared to say Madrid or Barcelona, while enjoying many of the same advantages. Sunshine aside, the region of Andalucia has 18 coworking spaces, 35 startup incubators and a growing community of entrepreneurs, uburdened by the costs associated with the so-called bigger cities.

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02. Miami, USA

Sitting pretty as the number two city in world for freelancers, Miami is also the number two city in the States for technology innovation and opportunity. With a high quality of life, not to mention close connection with Latin-America, Miami now houses Google, Uber, Twitter and Facebook offices, signalling its tech strength in depth.

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01. Lisbon

Lisbon is, officially, the best city in the world to freelance. With its low cost of living, super-fast connectivity and thriving tech scene, the capital of Portugal has quickly become a go-to for young, ambitious freelancers and startups searching for something just that little bit different.

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Where in the world do you dream of freelancing from?

 

 

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