Last year, I and other young freelancers were watching the 2018 Budget with interest, hoping for more treats than tricks from a party that claims to be pro-enterprise and against punitive taxation.
But afterwards, millennial entrepreneurs like me were left wondering…what exactly is the government’s attitude to the self-employed?
Sure, it’s great to see the New Enterprise Allowance being extended, which will give many more unemployed young people the chance to run their own business, as well as the unexpected gift of an early rise in the personal allowance.
When I started my freelance career and had to contend with low earnings, I was glad of the extra breathing space in my tax affairs, helping me to get established sooner.
Few incentives for young self-employed entrepreneurs
But there was little else to gladden the heart. Currently employers can claim very generous tax relief for training, but the self-employed have to pay for any retraining entirely from their post-tax income.
The Budget small print revealed that proposed reforms in this area have been shelved –disappointing for young freelancers like me trying to upskill.
And there are not one but two swords of Damocles hanging over freelancers’ heads. Like many sole traders, I’ve been appalled by the Chancellor’s determination to hike taxes for the self-employed in recent times, showing a complete lack of recognition for our self-sufficiency and professional risk-taking.
A chancellor at war with freelancers?
He has been forced into two embarrassing climb-downs over NI, but the last Budget said reforms would only be off the table “during this parliament”.
Meanwhile, plans to extend IR35 reforms to the private sector may have been postponed but if they are still enacted in 2020, this would see thousands of freelance contractors taxed wrongfully as employees.
This deters me from setting up a limited company – something I would have otherwise done at such a promising stage in my career.
Managing your freelance finances well isn’t about avoiding tax – it’s about keeping your life’s work sustainable and hopefully growing so you can contribute more to the economy and society. Only when the Treasury understands this will we get a Budget that treats us with respect, rather than suspicion.
This is Iona’s latest column for IPSE’s Modern Work Magazine. IPSE is the leading trade association for the self-employed, and Iona is the organisation’s current Freelancer of the Year. Read the rest of the magazine here.
What do you think? Let me know by leaving a comment or emailing email@example.com.