Money

95% of freelancers want Government to set its sights on big business.

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Recently, the leader of the Liberal Democrat Party, Vince Cable, called upon the Government to focus on the tax dealings of big businesses, instead of its clear and continued assault on the self-employed.

This is a sentiment echoed by 95% of freelancers and contractors who believe it is time large corporations faced the same kind of scrutiny when it comes to tax that the self-employed have been forced to endure in recent times.

Vince Cable's comments came soon after the Paradise Papers shone an unsavoury light on the tax dealings of a number of global businesses, including Apple, along with several highly wealthy UK individuals.

In Parliament, Mr Cable made the case that big businesses are given greater leniency by the Government compared to the self-employed.

"At present, a big crackdown is taking place on what are called IR35 companies. These are contractors for the health service, and they are often software specialists. There is undoubtedly a certain amount of tax avoidance in relation to national insurance, but these companies are being pursued in a highly aggressive way that the Government do not use in pursuing much bigger fish," he said.

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Unsurprisingly, this feeling is echoed by almost all freelancers and contractors surveyed by Qdos Contractor. As the Government continues its damaging plan to stamp out what they consider to be wide scale tax avoidance from the self-employed, 92% of independent workers believe they are seen as a soft target.

Seb Maley, Qdos Contractor CEO supported Mr Cable’s comments, and urged the Government to think carefully about how they treat freelancers when it comes to tax.

"We are in total agreement with Vince Cable here. The Government must do more to stop big businesses from suspected tax avoidance. Promises to do so have not been carried out, and unsurprisingly the self-employed are feeling unfairly targeted.”

Recent and potential changes to IR35 and the tax system has understandably dented freelancers’ confidence in the Government, with 65% stating they do not believe the UK has a pro freelancing Party in power.

Previous to this, 32% of independent workers revealed they see the complicated tax system is the most difficult aspect of self-employment, while 95% believe recent tax changes are reducing the benefits of working self-employed.

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Given the growing size and influence of the UK’s self-employed workforce, surely it’s time the Government committed to improving the landscape for freelancers and contractors?

"This Government has a long way to go to win back the support of the independent workforce which, together contributed £119bn to the UK last year. When it comes to tax, big businesses must face the same scrutiny from HMRC that independent workers are made to endure," Seb Maley explained.

Do you also believe the Government is letting big businesses off the hook?

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Contractors value sick pay above all other benefits.

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Freelancers and contractors consider sick pay as the most valuable statutory pay benefit, research from The FCSA and FreeAgent has revealed.

900 UK freelancers and micro-businesses highlighted that sick pay provision is the benefit they would most welcome, over maternity pay, job seekers allowance and pension auto-enrolment.

Interestingly, a business owner’s desire for employee-like benefits varies depending on company structure. Sole traders are more likely to value benefits, and rate sickness provision as 8.7 out of 10 in importance, while limited company owners rate this as 6.4 out of 10.

The research also highlighted that 76% of freelancers currently do not have any way of providing sick pay, maternity or paternity pay, holiday or redundancy pay in their business – suggesting that on a national scale, millions of self-employed people are working without basic entitlements which employees receive. 

Previous findings from FreeAgent showed that as many as 80% of freelancers and contractors were happy to work without employee rights and benefits. However, this was long-before the Government launched what many consider as an attack on the self-employed, which has included the slashing of tax-free dividend allowance and controversial IR35 reform, as they attempt to balance the tax system.

Unsurprisingly, many feel as though the benefits of working this way are now being reduced. This was highlighted by 95% of Qdos Contractor's client, who believe the Government is gradually reducing the advantages of working independently. Put simply, this is disconcerting, as Ed Molyneux, FreeAgent CEO explained.

“The UK Government seems determined to ‘level the playing field’ between self-employed and employed workers, but this is actually very unfair on people who run very small businesses, as it does not take into account the huge amount of personal risk that is associated with being self-employed.

“Ideally, the UK’s millions of freelancers and micro-business owners should be able to enjoy the same statutory entitlements as their employed counterparts - especially if they will be expected to pay the same level of tax. The Government needs to acknowledge the tremendous financial risks associated with starting and running your own business and bear this in mind when deciding on its future tax policies.”

In addition to freelancer’s and contractor’s concerning lack of financial security should they fall ill, go on holiday or take maternity or paternity leave, 35% do not have any plans in place to fund their retirement.

Matthew Taylor’s recent ‘Review into Modern Working Practices’, included a recommendation for ‘gig economy’ workers to start receiving employment rights. On the face of it, this was widely welcomed. But for it to work, IPSE has argued that first the Government must spend time carefully defining what constitutes as self-employed. Currently, the lines between a freelancer, contractor, ‘dependent contractor’ or ‘gig economy’ worker remain blurred.

Julia Kermode, FCSA’s chief executive also put forward the case for Government to consider shaping policy to meet the evolving needs of the self-employed.

“For many people who work for themselves, self-employment is a career choice and those who choose it know that this way of working does not come with statutory benefits.  However, it is clear from our research that many have not made appropriate provisions to cover benefits that employees receive. I hope that our evidence helps to inform policy decisions, particularly if the Government intends to increase tax or NICs for self-employed people – as there must be something offered in exchange for increasing the financial burden of the self-employed.  

“Not all self-employed workers want the same things so there is no one-size fits all solution, in particular those working through their own limited companies are more likely to already have provision for welfare benefits. The Government should find a way of offering additional benefits specifically to those people who want and need them.”  

Which statutory benefits would matter most to you? Join the conversation…

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Freelancer earnings strong amid uncertainty.

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Ongoing political and business uncertainty, which is every much a theme of 2017 as it was of 2016, is yet to leave its mark on UK freelancer and contractor earnings.

While confusion surrounding Brexit relentlessly rolls on – not helped by a General Election on 8th June – the vast majority of freelancers and contractors are earning the same or more this year, compared to their business performance in 2016.

Research from contractor tax adviser, Qdos Contractor highlighted as many as 78% of 1508 UK independent professionals have reported either no change (56%), or an upturn (22%) in earnings this year so far.

Adding to the growing concerns of UK business, changes to IR35 in the public sector were also enforced in April just gone, leaving question marks hanging over the very future of contractors working on major public sector projects. 

“Brexit, controversial changes to IR35 in the public sector, not to mention the shock news of an imminent General Election has cast a concerning cloud of uncertainty over UK business this year,” explained Qdos Contractor CEO, Seb Maley.

“However, that the majority of independent workers’ business performance remains unchanged, or in 22% of cases, better, just goes to show the importance and resilience of the UK’s flexible workforce.”

Each of the three main political Party’s have now released their manifestos, which are being closely scrutinised in the lead up to the 2017 General Election on June 8th. With questions remaining over the existing Government’s commitment to those working independently, Seb Maley among others, called for more support for the UK’s 2million independent workers.

“Freelancers and contractors contributed £119bn to the economy in 2016. Therefore, it’s vital that Brexit negotiations, and the next Government, whoever that might be, are committed to building a fair tax system and an environment in which the UK's independent workforce can thrive.”

Has Brexit, the upcoming General Election and recent IR35 changes affected your business performance in 2017? Join the conversation…

 

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