Self-employment: what the pundits say

Hammond’s hammer

As expected, the Chancellor went after Britain’s growing army of self-employed workers in this week’s Budget, closing “loopholes” that mean they pay less tax than their salaried counterparts, said The Guardian. The self-employed will see their Class 4 National Insurance contributions increase by 1p in the pound to 10% from April 2018, with a further 1% increase in 2019. Upping the tax take from freelancers is increasingly important to the Treasury: 45% of the growth in jobs since 2008 has been in self-employment. And much of that has been in “traditionally high-paid sectors such as advertising and banking”. The Treasury is “concerned” that this surge isn’t just “being driven by entrepreneurialism in the ‘gig economy’, but by tax avoidance”.

Political gamble

The “political fallout” could be high,” said Vanessa Houlder in the FT: some 4.8 million people, or one in seven workers, are now self-employed. But Hammond was “under pressure to address the issue”, because of the increasing cost of their tax advantages, which rose 59% to £5.1bn in the year to April 2017 compared with the previous year. This might not be the end of it: studies show that selfemployed workers have an average tax advantage of £1,240; freelancers who set up companies to cut their tax bills “can make even bigger savings”. There’s a wider point too. As Colin Ben-nathan of KPMG points out: Hammond needs to take a “strategic approach to how work is taxed to better reflect the changing economy”.

Whacked!

“There are benefits to being your own boss,” said Ian Birrell in The Times. “But there are also definite disadvantages”: from “the rollercoaster nature of work”, to the loss of entitlements such as holiday pay and employer pension contributions. “Now the Treasury wants to get its claws on our cash.” Government spin doctors “peddle stories of fat-cat consultants ripping off the Exchequer”. Yet who are the self-employed really? “Many are women, fitting in work around families, or older workers padding out inadequate pensions.” One in five relies on tax credits to top up incomes. Britain’s self-employed workers are “fuelled by a sense of individualism and a spirit of entrepreneurialism”. Where is the sense in “whacking” that?