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Autumn budget disappointing for freelancers

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Supporters of freelancers and creatives last night united to frame Autumn Budget 2017 as “disappointing,” for letting them each down on a number of different grounds.

Speaking first, the Creative Industries Federation branded the chancellor’s offerings a “missed opportunity,” accusing him of not acknowledging the industries’ economic value.
Mr Hammond showed a “lack of commitment” to creative industries, and a lack of ambition that will damage creative industry job creation in the UK’s towns and cities, the CIF said.
In line with the criticism, the chancellor mentioned “creativity” only once in his speech (“A beacon of creativity”), despite him repeatedly trumpeting Maths, Science and Tech pursuits.
Ed Molyneux of FreeAgent, an accounting platform for freelancers, agreed that Mr Hammond’s offerings were below par. But mainly because they were too taxing or not tax-relieving enough.
“I don’t believe that this is a particularly positive Budget for the micro-business sector. Rather than actually offering real support or meaningful legislation to people running their own businesses in Britain, the chancellor has simply kept the status quo,” he said.
Outside of tax, Autumn Budget 2017 promises to help the creative industry by developing “pioneering technology for creative content”.
It also says visa-related plans to expand the exceptional talent route into the UK will go ahead, “benefitting current and future leaders in the digital technology, science, arts and creative sectors.”
Broadband, which all four sectors thrive on the fast and reliable supply of, is another area that Mr Hammond vowed to help, in the shape of a £385m project boost to develop 5G and full-fibre networks.
He also announced the government will work with businesses, lenders, insurers, the British Business Bank and the IPO to “overcome the barriers to high growth” for IP-rich firms in the creative and digital sectors.
But CIF boss John Kampfner believes it is not enough. “Failure to back our world-leading creative enterprises and entrepreneurs will be to the detriment of a sector that creates jobs at four times the rate of the wider UK workforce,” he said.
Reflecting on that workforce however, the federation did suggest that growth in the UK could continue by the chancellor’s decision yesterday to maintain the current VAT threshold for freelancers.
“It’s pleasing to see that the VAT threshold has not been lowered,” agreed FreeAgent’s Mr Molyneux. “[But] this is hardly cause for celebration. Neither is the exemption of ‘white van men’ from diesel charges, which is the very least that the government could have done to protect the country’s army of self-employed tradespeople.”
More positively for people who work for themselves, Autumn Budget 2017 announces a 2018 consultation on extending the scope of tax relief available to the self-employed for work-related training costs.
Likely to be welcomed by freelancers’ trade body IPSE, which has campaigned hard on the issue, the promise to consult features at chapter 3.14 of the Autumn Budget’s full report.
However, a seemingly negative tax move by Mr Hammond yesterday appears to cancel out this positive of potentially fairer tax treatment for freelancers who want to upskill.
“It’s a shame the government are letting this relief lapse,” said John Cullinane, CIOT Tax Policy Director, referring to the chancellor’s decision to not renew Disincorporation Relief.
The relief was created to address the problems faced by some small businesses that have chosen to be a limited company in the past and want to return to a simpler legal form, such as a sole trader.
Although there has been a very low take-up of the relief, (fewer than 50 claims had been made as of March 2016) the CIOT had suggested that the relief might be more popular if it was broadened.
But the government has now said that it wants DR to just peter out. “Rather than letting this happen, the government should have searched for a solution that fits into an overall government strategy for the taxation of small businesses – and one that addresses the differences between the taxation of different types of income, and between incorporated and unincorporated businesses.
“There would be wider benefits for the exchequer if the tax benefits of being incorporated diminished.In that scenario, many smaller companies might look to disincorporate and return to sole trader status in order to simplify their affairs.”
Mr Cullinane added: “We hope that the government will keep this area under review. A broader relief with some anti-avoidance provisions might play a sensible part in a more rational overall system which tries to reverse the current tax incentive for businesses to incorporate.”
One area that the government has been keeping under review is the ‘gig economy.’ However, following the Taylor Review’s recommendations, the government appears to be reviewing again.
The Autumn Budget 2017 states: “The government will publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer.”
A follow-up paragraph from the government has received more praise, for reassuring observers -- and practitioners of the gig economy -- that officialdom appreciates the subtleties of the issues at stake.
The Treasury says: “The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully.”
In a further acknowledgement of how taxing tax can be, the chancellor used yesterday’s statement to unveil a £1.5bn package to address concerns about the operational delivery of Universal Credit.
On top of this multi-layered relief for recipients of the benefit, Autumn Budget 2017 announces:
- An increase in the personal tax-free allowance to £11,850 a year for April 2018.
- Funding of £3billiion to help with Brexit preparations
- A new points-based system for late or missing self-assessment returns
- No change in Making Tax Digital, in terms of its make-up or timelines
“[It’s] disappointing that are still a number of issues including digital tax that have not been expanded in this Budget,” said Mr Molyneux, a former freelancer.
“I would have preferred to see the chancellor provide clarity on those issues, as well as introducing new legislation to curb the culture of late payment that is plaguing the micro-business sector and further simplifying National Insurance, VAT and other business taxes.
“The Budget is therefore a missed opportunity to provide some much-needed relief and reassurance to these 5-million business owners, who make up the backbone of the economy.”
Speaking first, the Creative Industries Federation branded the chancellor’s offerings a “missed opportunity,” accusing him of not acknowledging the industries’ economic value.Mr Hammond showed a “lack of commitment” to creative industries, and a lack of ambition that will damage creative industry job creation in the UK’s towns and cities, the CIF said.In line with the criticism, the chancellor mentioned “creativity” only once in his speech (“A beacon of creativity”), despite him repeatedly trumpeting Maths, Science and Tech pursuits.Ed Molyneux of FreeAgent, an accounting platform for freelancers, agreed that Mr Hammond’s offerings were below par. But mainly because they were too taxing or not tax-relieving enough.“I don’t believe that this is a particularly positive Budget for the micro-business sector. Rather than actually offering real support or meaningful legislation to people running their own businesses in Britain, the chancellor has simply kept the status quo,” he said.Outside of tax, Autumn Budget 2017 promises to help the creative industry by developing “pioneering technology for creative content”.It also says visa-related plans to expand the exceptional talent route into the UK will go ahead, “benefitting current and future leaders in the digital technology, science, arts and creative sectors.”Broadband, which all four sectors thrive on the fast and reliable supply of, is another area that Mr Hammond vowed to help, in the shape of a £385m project boost to develop 5G and full-fibre networks.He also announced the government will work with businesses, lenders, insurers, the British Business Bank and the IPO to “overcome the barriers to high growth” for IP-rich firms in the creative and digital sectors.But CIF boss John Kampfner believes it is not enough. “Failure to back our world-leading creative enterprises and entrepreneurs will be to the detriment of a sector that creates jobs at four times the rate of the wider UK workforce,” he said.Reflecting on that workforce however, the federation did suggest that growth in the UK could continue by the chancellor’s decision yesterday to maintain the current VAT threshold for freelancers.“It’s pleasing to see that the VAT threshold has not been lowered,” agreed FreeAgent’s Mr Molyneux. “[But] this is hardly cause for celebration. Neither is the exemption of ‘white van men’ from diesel charges, which is the very least that the government could have done to protect the country’s army of self-employed tradespeople.”More positively for people who work for themselves, Autumn Budget 2017 announces a 2018 consultation on extending the scope of tax relief available to the self-employed for work-related training costs.Likely to be welcomed by freelancers’ trade body IPSE, which has campaigned hard on the issue, the promise to consult features at chapter 3.14 of the Autumn Budget’s full report.However, a seemingly negative tax move by Mr Hammond yesterday appears to cancel out this positive of potentially fairer tax treatment for freelancers who want to upskill.“It’s a shame the government are letting this relief lapse,” said John Cullinane, CIOT Tax Policy Director, referring to the chancellor’s decision to not renew Disincorporation Relief.The relief was created to address the problems faced by some small businesses that have chosen to be a limited company in the past and want to return to a simpler legal form, such as a sole trader.Although there has been a very low take-up of the relief, (fewer than 50 claims had been made as of March 2016) the CIOT had suggested that the relief might be more popular if it was broadened.But the government has now said that it wants DR to just peter out. “Rather than letting this happen, the government should have searched for a solution that fits into an overall government strategy for the taxation of small businesses – and one that addresses the differences between the taxation of different types of income, and between incorporated and unincorporated businesses.“There would be wider benefits for the exchequer if the tax benefits of being incorporated diminished.In that scenario, many smaller companies might look to disincorporate and return to sole trader status in order to simplify their affairs.”Mr Cullinane added: “We hope that the government will keep this area under review. A broader relief with some anti-avoidance provisions might play a sensible part in a more rational overall system which tries to reverse the current tax incentive for businesses to incorporate.”One area that the government has been keeping under review is the ‘gig economy.’ However, following the Taylor Review’s recommendations, the government appears to be reviewing again.The Autumn Budget 2017 states: “The government will publish a discussion paper as part of the response to Matthew Taylor’s review of employment practices in the modern economy, exploring the case and options for longer-term reform to make the employment status tests for both employment rights and tax clearer.”A follow-up paragraph from the government has received more praise, for reassuring observers -- and practitioners of the gig economy -- that officialdom appreciates the subtleties of the issues at stake.The Treasury says: “The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully.”In a further acknowledgement of how taxing tax can be, the chancellor used yesterday’s statement to unveil a £1.5bn package to address concerns about the operational delivery of Universal Credit.On top of this multi-layered relief for recipients of the benefit, Autumn Budget 2017 announces:- An increase in the personal tax-free allowance to £11,850 a year for April 2018.- Funding of £3billiion to help with Brexit preparations- A new points-based system for late or missing self-assessment returns- No change in Making Tax Digital, in terms of its make-up or timelines“[It’s] disappointing that are still a number of issues including digital tax that have not been expanded in this Budget,” said Mr Molyneux, a former freelancer.“I would have preferred to see the chancellor provide clarity on those issues, as well as introducing new legislation to curb the culture of late payment that is plaguing the micro-business sector and further simplifying National Insurance, VAT and other business taxes.“The Budget is therefore a missed opportunity to provide some much-needed relief and reassurance to these 5-million business owners, who make up the backbone of the economy.”