Workforce specialists offer their predictions and wish lists for the upcoming Autumn Statement and how freelancers, contractors, temps and side hustlers might want to prepare for any bad news.
Dividend tax hike would be “short-sighted and counterintuitive”
Seb Maley, CEO of tax specialist for the self-employed, Qdos, says the Autumn Budget comes at a “critical time for freelancers and contractors”.
“Speculation is mounting that the Chancellor will target dividend tax, potentially by reducing the tax-free threshold. This would be a short-sighted, counterintuitive move – one that increases the tax burden on millions of small business owners at the worst possible time,” says Maley.
“Having U-turned on the IR35 reform repeal, the government has broken promise after promise. Now is not the time to inflict more pain on the self-employed, who hold the key to the economic recovery.”
Trading allowance should be tripled
Julia Kermode, founder of IWORK – the body championing independent workers – says tax hikes will only lead to more suffering for the self-employed.
“Ahead of the Autumn Budget, all the talk is about tax hikes – and they may well materialise. But I can’t help but think that the government should be doing the opposite, particularly for anyone needing to supplement their current income,” says Kermode.
Kermode suggests, “Take the trading allowance, which allows you to earn just £1000 a year in miscellaneous income from a side hustle until tax kicks in. This is a tiny amount and doesn’t even come close to the levels of extra income people need to pay their bills – so it really needs to be increased to at least £3000.
“Nearly half of Brits have a side hustle. Encouraging more people to earn money independently and start their own businesses can only be a good thing for the economy. Adjusting the trading allowance threshold is a quick win and one that will give gig economy workers and second jobbers a massive boost.”
A lower tax regime keeps unemployment low, maximises government receipts through Income Tax and Corporation Tax. Otherwise, employers are forced to cut costs, and redundancies are usually the path of least resistance – then the Exchequer loses the combined National Insurance and Income Tax.
Paul Farrer, founder Aspire
Reconsider the burden that is Employers’ NI
Paul Farrer, founder and chairman of recruitment agency, Aspire, believes cancelling the increase to Employers’ National Insurance was the “right decision”.
“Now, the new Prime Minister and his Chancellor must build on that,” says, Farrer, “by committing to not increasing the rate again, and ideally by considering a further reduction.”
“A lower tax regime keeps unemployment low, maximises government receipts through Income Tax and Corporation Tax. Otherwise, employers are forced to cut costs, and redundancies are usually the path of least resistance – then the Exchequer loses the combined National Insurance and Income Tax,” says Farrer.
He continues, “If this government wants to be seen as pro-business, it must create the right environment for businesses to thrive. Committing to maintaining Employers’ National Insurance at its current rate is the minimum; while tax cuts in this climate are unlikely, a reduction would go some way to rebalancing the tax burden, incentivising employment at a crucial time.”