IPSE Publish Manifesto for 2017

On the 24th of May, IPSE - the Association of Independent Professionals and the Self Employed, released their manifesto, which they call “A Contract with the Self-Employed”. It sets out their recommendations for the encouragement and protection of the UK’s 4.8 million self-employed workers, to enable them to continue their £119 billion contribution to the national economy. We've summarised their main points below. 

The document includes a statement by IPSE Chairman, James Collings, in which he emphasises the importance of the self-employed in maintaining a strong and flexible economy, and criticises the outgoing government’s approach to taxing the self-employed as “a complete disaster”. He calls for “a rational approach”.

 A statutory definition of self-employment

IPSE appear to welcome the Prime Minister’s review into modern employment practices, seeing it as an opportunity to take steps towards positive reform. One such reform, they suggest, should be a statutory definition of self-employment. They believe that the current lack of a legal definition gives rise to uncertainty, which can be exploited to create the much debated “forced self-employment”. They call for the definition to include consideration of a number of factors, including autonomy in work, control over working arrangements and the taking on of business risk.

A fairer, more efficient tax system

“Our tax system is no longer fit for purpose,” says IPSE, since it’s based on an assumption of traditional employment. As the number of self-employed workers increases, the issues with the current system become more apparent and attempts to resolve it have so far resulted in “misjudged and ill-conceived policies”.

IPSE call for a number of “bold steps” to be taken, including:

  • A bespoke tax structure for freelancers. IPSE suggest the name “Freelancer Limited Company” for this bespoke structure, which would clarify tax and employment status of independent professionals, and presumably allow legislators to either specifically target them, or exclude them from legislation as appropriate.
  • A revised timetable for Making Tax Digital. IPSE call for MTD to be introduced on a voluntary basis until at least 2025 and for businesses under the VAT threshold to be initially exempt. They also suggest mandatory quarterly reporting be removed, as this unnecessarily increases accounting and compliance costs. 
  • Removal of HMRC from the formation of tax policy. As HMRC are not overseen by a ministerial team, and they have responsibility for policing tax legislation, IPSE believe it’s inappropriate for them to be so involved in the formation of tax policy. IPSE suggests they should concentrate on enforcement, and policymaking should rest with HM treasury, who are overseen by ministers.

Securing the future of the self employed

While acknowledging that independent professionals must take responsibility for their own affairs, ISPE believes more can be done to incentivise saving among the self-employed. Their own research indicates that 37% of IPSE members have no pension, and 16% have not saved for retirement at all. IPSE recommend:

  • A review of pension arrangements for the self-employed. This should include an examination of pension auto-enrolment as an option for independent professionals, following its successful use to encourage saving among employees.
  • Creation of a new “self-employed” pension. One reason fewer self-employed people save is the need to have reserves available for lean periods or unexpected costs. To combat this, ISPE suggest a new “self-employed pension”, that would allow the worker to temporarily access pension savings to cover lean periods. They suggest this drawdown should be tax free if paid back within 2 years. 

IPSE also believe the welfare system should be reformed to make it fairer for the self-employed, as the current disparity can make their position even more precarious. They suggest:

  • Provide fair parental benefits. Currently self-employed mothers are only eligible for Maternity Allowance and there is no support for fathers at all. IPSE suggest they should be supported by a form of statutory Maternity or Paternity pay.
  • Adjust Universal Credit’s “minimum income floor”. Currently, Universal Credit uses an assumed level of income for self-employed claimants, referred to as the “Minimum Income Floor”. This is taken into account when their benefit is calculated, even if they actually earn less (if they earn more their actual income will be taken into account). IPSE suggest the minimum income floor should not apply in the first two years of trading, and should be applied to the self-employed on an annual basis.

Creating a positive business environment

Not content with asking for a fairer tax system, more support and better training, IPSE have a range of other suggestions, aimed at removing some of the practical challenges facing independent professionals. These include:

  • Empower the incoming Small Business Commissioner. IPSE are optimistic about the new Small Business Commissioner’s ability to tackle poor business practice, particularly late payment. However, they caution that legislation is required to make sure he has the necessary powers.
  • Deliver fast broadband across the country. Many rural businesses need better internet access in order to compete effectively. IPSE call for a government commitment to 100% access to broadband by 2020, including a maximum ratio between the fastest and slowest speeds.
  • Open up procurement to microbusinesses. Onerous bidding requirements, such as large liability insurance, currently exclude small businesses from government contracts. IPSE suggests that removing these barriers would allow consortia of self-employed professionals to compete for government work. They also suggest that large framework contracts be published for review in an open source format to ensure fairness.
  • Recognise self-employment in the industrial strategy. Independent professionals play a pivotal role in the growth and flexibility of the UK economy and ISPE call for this to be recognised in the government’s industrial strategy, particularly in ensuring the flexible workforce contains the right skills.

Orange Genie Support independent professionals with our specialist accountancy and PAYE umbrella solutions. We whole heartedly support IPSE’s view that the flexible workforce is vital to the future and growth of the UK economy, and that a bespoke, considered approach to taxation and support is both required and overdue.

You can read the full IPSE Manifesto here.

If you’re considering a move into contracting and you have questions, or if we can help in any way, please call our expert team on 01296 486483 or email info@orangegenie.com.

 

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