Advice

2% of freelancers confident in Small Business Commissioner.

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After a two-year search, the Government has appointed former Conservative MP Paul Uppal as the Small Business Commissioner – the individual to lead an independent office tasked with empowering every one of the UK’s 5.5million small businesses, with a focus on tackle late payment once and for all.

However, new research has surfaced to suggest that just 2% of freelancers and contractors believe the Government and new Commissioner will take the issue seriously. Statistics released by FreeAgent reflect the sheer size of the challenge, with just 51% of all invoices sent by freelancers and contractors paid on time last year.

With little to no confidence in the Commissioner’s ability or power to put an end to late payment, 70% of micro-businesses have instead urged the Government to penalise the worst offenders, and secure compensation from their late paying clients.

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59% went on to state the need for a late payment code of conduct, which clients would be required to agree and adhere to. This is a sentiment echoed by IPSE, who have lobbied for the strengthening of the Prompt Payment Code.

Unsurprisingly, just 29% of micro-businesses believe naming and shaming the worst offenders would be of any benefit. It goes without saying that freelancers are understandably wary about jeopardising valuable client relationships.

FreeAgent CEO, Ed Molyneux welcomed Mr Uppal into his new role, but voiced concerns about the new Commissioner’s ability to actually make a difference.

“It’s good news that the government has finally appointed a Small Business Commissioner, with the specific remit of dealing with the late payment problem faced by micro-businesses. However, the reality is likely to be that Mr Uppal will actually have limited power to punish companies who routinely pay late, aside from just naming and shaming them.”

57% of small business owners were completely unaware there was to be a Small Business Commissioner appointed, which is an issue in itself.

Upon the appointment of Mr Uppal, Qdos Contractor CEO Seb Maley made it clear that instead of late payment, it is current tax system which affects UK freelancers and contractors most.

“The newly-established post and appointment of a small business commissioner marks an important step in the right direction. It sends a signal from the Government that they are actively looking to improve the landscape for freelancers and contractors.

“The government must work to win back the support of the self-employed. For Britain to be the best place in the world for new entrepreneurs, we need a tax system which works for everyone, and takes into consideration the added risk and lack of security this way of working brings.”

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While it's all well and good to have ambitious plan to tackle late payment, it's the lack of the specifics which might well worry freelancers and contractors. A vision is one thing. The planning, execution and delivery is another thing altogether.

Actions speak louder than words, and Business Secretary Greg Clark’s rather bland welcoming statement will have done nothing to convince micro-businesses that this appointment will be a catalyst for change.

“Small businesses are the backbone of our economy, providing jobs and opportunities across the country. Supporting Britain’s 5.5 million small businesses is at the heart of this Government’s Industrial Strategy, and his ambition to tackle unfair payment practices will help support our goal to create an economy that works for all.”

Given the Government has previously appointed an Ambassador for Small Business, and a Minister for Small Business, Industry and Enterprise, it remains to be seen whether this newly-established role will genuinely serve to benefit the UK’s 4.8million self-employed.

Are you confident the new Commissioner can drive change and truly tackle late payment?

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Despite HMRC's insistence, IR35 reform is affecting public sector contracting.

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Changes to the off-payroll working rules introduced in April of this year are, contrary to reports from HMRC, affecting public sector contracting. Controversial IR35 reform shifted the responsibility for determining employment status from the contractor to the public sector client and agency.

Making largely inexperienced public sector companies and agencies responsible for setting the IR35 status of contractors risked thousands of inaccurate IR35 decisions, and the very real prospect of a public sector exodus.

Understandably, contractors feared being wrongly placed inside IR35 by clients and agencies - a determination which require them to pay the same tax as an employee, but without any employment benefits.

Leading industry voices expressed outrage over recent public sector reform, which has intensified following mounting speculation that similar changes will be rolled out to the private sector before long.

And now, to dispute HMRC’s opinion that IR35 reform is working, APSCo have published research to suggest otherwise. 70% of recruiters have revealed that contract placements in the public sector have dropped off, suggesting that contractors are now less inclined to work in the sector.

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Worryingly, the research also highlights that IR35 reform has impacted the number of contractors working through their own personal service companies. In April 2016, over 50% of APSCo survey respondents revealed that more than 75% of their public sector contractors were working through their own company. By August 2017, this figure had plummeted to 20%, which is proof in itself that IR35 reform is damaging the UK’s independent workforce and public sector staffing.

Reinforcing the widely-held opinion that IR35 reform would impact public sector contracting and temporary recruitment, Samantha Hurley, Director of Operations at APSCo explained:

“As we feared, it seems that these changes have had an adverse effect on the supply of contractors to the public sector. The increase in rates which has been noted can be attributed to two factors: the scarcity of resource created by candidates moving into the private sector and the market adjusting by passing on additional tax and NI costs to the public sector client.”

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In due course, HMRC is expected to roll reform out in the private sector. 78% of recruiters believe that extending reform will impact the UK's ability to source flexible labour, while 48% of contractors surveyed by Qdos Contractor marked potential private sector reform as their number one business concern. As many as one in three contractors would consider going employed should IR35 reform reach the private sector. 

And unfortunately, many believe it is a case of not if, but when private sector reform arrives, as Samantha Hurley stated:

“We assume that HMRC is continuing to consider an extension of the Off Payroll rules into the private sector. Like our members, we believe that this will have an adverse impact on the strength of the UK’s labour market and wider economy.”

“The rise of professional contracting delivers multiple benefits to the UK economy through a highly productive and skilled labour force available on demand. Introducing the Off Payroll rules into the private sector without a full understanding of the market and the impact that an increase in costs will have on private sector productivity could have a devastating effect on UK competitiveness.”

Have you been affected by IR35 reform? Join the conversation…

 

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How to calculate working from home expenses.

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As the world of work continues to evolve, increasing numbers of freelancers, contractors and even employees now work from home in the UK. Technology has liberated how, when and where we work, giving the UK’s 2million independent workers the opportunity to work remotely, flexibly and from the comfort of our own homes.

And as self-employed workers, all freelancers and contractors are able to claim tax relief when working from home. HMRC deems it a legitimate business expense, meaning you can claim back a portion of the cost of your rent or mortgage repayments, electricity, council tax or heating bills.

However, typical guidelines to calculating just how much you’re able to claim back can be tricky to understand and stuffed with jargon – enough to put many of us off claiming this expense before we even begin.

But given 95% of freelancers and contractors believe benefits of being self-employed are being reduced by the Government, it’s essential to make the most of this legitimate tax relief. And fortunately, tax expert Emily Coltman of FreeAgent is on hand to break it down for you.

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Got a question about how to claim tax relief when working from home? Join the conversation...

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