Update: we now have the Conservative manifesto published yesterday. This is short on specifics when out comes to the self-employed but they are proposing to launch a review if re-elected with the goal of improving support for the self employed. The review will cover improving access to finance and credit (not least mortgages), making the tax system easier to navigate, and examining how better broadband can boost home- working.
With the Labour Party and Liberal Democrats publishing their manifestos for the forthcoming general election, we are starting to see what see what it could mean for self-employed people.
We still don’t know when the Conservatives will publish their manifesto (now published – see update) – it is looking likely that they won’t announce it all in one go, preferring instead to let it come out in parts so that they can manage it to their advantage.
Only the Lib Dems pick up on the proposal, set out in the review of employment rights by former Labour adviser Matthew Taylor, for a new category of dependent contractor. This would differentiate between those who are genuinely independent of their clients from those who are essentially extra hands brought in and managed by an employer. The latter group would be taxed as employees but would also benefit from employment rights such as sick pay and paternity rights.
The Conservatives said they agreed with this but so far have only said they’d do the taxation part of treating dependent contractors as employees, without the accompanying employment rights.
Labour initially said contractors should get employment rights if they are taxed as employees, but this is down-played in the manifesto, which just says they will end bogus self employment and treat everyone as a ‘worker’ (Labour’s phrase) except those who are genuinely self-employed. This just seems to skirt around the problem.
All of this of course arose from the controversy over IR35, introduced under Labour. The Conservatives said they’d review this, which they did, but everyone understood this to mean they’d get rid of it. In the event they kept IR35 and, in the public sector where they are the employer, decided it should be the employer and not the contractor who should decide an individual’s IR35 status. And the noises from ministers have been that they don’t think enough people are being caught by the rules at present.
Labour haven’t said what they’d do about this but their statements in the past suggest they would extend this principle to the private sector as well, so that across the economy it would be for employers rather than contractors to determine someone’s IR35 status. The manifesto’s reference to ending bogus self-employment reinforces this.
While the Labour Party come at the issue of self-employment from the perspective of employment rights and regulation, The Lib Dems do seem to put it in the context of the wider commercial environment in which self-employed people operate, with a typical emphasis on supporting entrepreneurs and the small business community. On matters such as mentoring, business finance and the future of broadband, there are some welcome – if not yet defined – references to ensuring this meets the needs of small business and entrepreneurs.
One area where the Labour Party are potentially ahead is in their call to develop collective income-protection schemes for the self employed. This has been identified as a real gap by many self-employed people and could open the way for government to work with the financial services industry to develop pension schemes and insurance against loss of income that are geared to the needs of the self-employed.
Key Points from the manifestos:
End bogus self employment and create a single status of ‘worker’ for everyone apart from those genuinely self-employed in business on their own account.
Develop collective income-protection schemes for the self-employed.
Tackle late payments that leave small businesses waiting months to be paid, including banning late payers from public procurement.
New ‘dependent contractor’ employment status in between employment and self-employment, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement.
Reviewing the tax and NI status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.
Giving a right to request a fixed-hours contract after 12 months for ‘zero-hours’ and agency workers, not to be unreasonably refused.
End retrospective tax changes like the loan charge brought in by the Conservatives, so that individuals and firms are treated fairly, and review recent proposals to change the IR35 rules.
Prioritise small and medium-sized businesses in the rollout of hyper-fast broadband.
‘Start-up allowance’ to help those starting a new business with their living costs in the crucial first weeks of business.
Support fast-growing businesses seeking to scale up, through the provision of mentoring support.
Expand the rights and benefits available to those in insecure forms of employment, such as offering parental leave and pay to the self-employed.
A review of self employed to better support the self employed.
The review will cover improving access to finance and credit (not least mortgages), making the tax system easier to navigate, and examining how better broadband can boost home- working.