IPSE’s manifesto for the General Election 2017, A Contract with the Self-Employed, lays out how the next government can support the self-employed, including the question we’ve all been asking; the future of IR35.
The number of self-employed workers in the UK has rapidly hiked by 47% since 2001, that’s 16 years ago, and it’s is expected to rise.
James Collings, IPSE Chairman, said, “The next government must fully embrace the structural shift to give the economy the flexibility it needs.”
“Overall, the outgoing government’s approach to taxing the self-employed has been a complete disaster, with the ill-conceived plans to change IR35 and national insurance rightly attracting strong criticism.”
The key policies recommended in IPSE’s manifesto include:
1. Bespoke tax system for self-employed
Stand-alone tax system – This should be implemented for self-employed professionals, as the existing scheme is solely fit for the traditional employee-employer structure. The new system will be responsible for clarifying the tax and employment status of independent workers, and protect government revenue.
Making Tax Digital – This should be mandatory after 2025, the largest businesses should be targeted first, and businesses under the VAT threshold should remain exempt. The requirement for quarterly reporting should be removed.
NIC – No increase should be implemented.
Tax Decision Makers – The responsibility to form tax policy should lie with HM Treasury, where it can be overseen by Ministers, rather than HMRC as they are not overseen by a ministerial team.
2. Fair parental benefits for self-employed parents
Statutory maternity/paternity pay – There is currently no support for fathers at all.
Adoption Allowance should be introduced.
Keeping in Touch Days -The government should review how guidelines around ‘KIT Days’ can best support self-employed mothers to upkeep their business.
3. IR35 damage control
By shifting the IR35 burden to the end client/agency, some independent professionals have terminated their contracts, to move into the private sector. This has had a knock-back effect on public-sector contracts as they are now stalling as a direct result of this.
The future of IR35 – IPSE are recommending that the IR35 legislation change should not be implemented to the private sector.
4. Pension scheme
The government should implement a review into incentivising pensions for the self-employed. The manifesto reads,
“It should explore ‘auto-enrolment’ and a ‘portable benefits system’ as possible solutions. This review should consider the design of a self-employed pension which allows temporary drawdown to cover fallow periods of work, with the drawdown being tax-free if repaid in full within 24 months.
IPSE research shows that 37% of its members don’t have a pension, while 16% don’t save for retirement at all.
The General Election 2017 is set to take place on 8 June 2017, coinciding with National Freelancers Day.
Following the snap election announcement, the Conservative government made a U-turn on cutting tax-free dividend allowance and the implementation of Making Tax Digital. The measures are expected to come into effect once the next government has been elected.
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