Industry bodies hit out at planned tax hikes for self-employed

Posted 13th March 2017 in For Businesses For Workers

The recent announcement of new tax increases for the self-employed have been met with considerable criticism from the industry bodies representing freelancers and contractors.

Responding to chancellor Philip Hammond’s Budget last week, the Association of Independent Professionals and the Self Employed (IPSE) has described the 2p increase for self-employed National Insurance contributions and the reduction of the allowance for dividend tax from £5,000 to £2,000 as “punitive”.

According to the organisation, this will lead to higher costs for sole traders and people working through limited companies, potentially having a detrimental impact on the self-employed workforce at a time when this demographic has emerged as a key driver of labour market growth.

Although certain aspects of the Budget were praised – including the decision to delay the introduction of mandatory quarterly tax returns for smaller businesses, and the planned improvements to parental benefit allowances – IPSE’s overall verdict was negative, with the body expressing concern that the new measures will put many people off starting their own businesses.

Chris Bryce, chief executive of IPSE, said: “It’s entirely right for the chancellor to look at taxation of the self-employed, but changes should only come after a thorough consultation with the business community, which has not taken place.”

This view was echoed by the Freelancer and Contractor Services Association (FCSA), which asserted that the government should have waited for the findings of Matthew Taylor’s self-employment review this summer before announcing this “kneejerk” policy change.

Julia Kermode, chief executive officer of FCSA, said: “We have seen a raft of tax policy changes penalising self-employed professionals over the last few years, leaving them financially worse off and undervalued.”

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