It’s been a disruptive week for the future of freelancing. The next time a budget is announced we will have left the EU, a possibly tempestuous move that will likely lead to a slow in growth, and a loss of jobs, wages, and investment. While the end of austerity has been announced as a way of building faith that the government will succeed in leaving the EU, eyebrows have been raised and questions asked as to how they are planning to do that.
The government has pushed some big numbers out in a bid to lift confidence and assure the country austerity has indeed come to an end. The key points that came out are that the deficit is £11.6b lower than forecasted with unemployment down and wages up, with £500m of extra funding for Brexit preparation and an additional £500m going to The Housing Infrastructure Fund, another £1b for the armed forces, and £30b for road improvement.
This was the most important budget for freelancers in the private sector to date. The enforcing of IR35 in the private sector was announced. IR35 has been notorious among regulators and companies in the freelance sector; while many argue it’s lack of implementation is allowing vast tax avoidance, others suggest that the flexibility of work freelancers enjoy is paramount to a thriving creative economy.
David Byers writes in The Times that the reform of IR35 rules, aimed at preventing contractors and the companies that hire them from minimising the amount spent on income tax and national insurance contributions may be devasting for freelance workers. The move could potentially cost some contractors 25 per cent of their income. This is already a highly complex area where many struggle to understand their status and the importance placed on it by the government can potentially serve to undermine working schedules that increase productivity.
In The Guardian, Jasper Jolly pointed out that this change is the largest individual new revenue raiser in the budget this is in line with Matthew Taylor stating that as many as 80 per cent of freelancers are non-compliant with tax regulation. The new changes won’t come into effect until 2020 and will only affect medium to large businesses, but for companies such as Facebook and Google, as much as 50% of their workforces are freelance. Any format of IR35 enforcement will detract from the likelihood that workers will choose to go freelance and can potentially undermine the availability of the UK’s flexible workforce. The full details of the plan will be released next summer.
The future of freelancing is sure for a shake-up, but on some more sturdy ground, Tracy Brabin MP writes in Politics Home on the importance of bringing parental leave to freelancers and the self-employed, offering an allowance that could also be shared with partners, allowing parents to ease back into work when they are ready rather than when they have to. Ollie Smith writes in CityWire that the DWP will publish a paper setting out the process and policy for government
The focus for this week is looking to the future of freelance regulation and being aware of the law change in two years’ time.