Freelancers are getting an unfriendly vibe from the UK tax system suggests Julia Kermode of IWORK/ Photo by Klaus Nielsen via Pexels
The founder of independent and temp worker advocacy group IWORK, says the UK tax system has become “unfriendly to self-employed workers… clearly looking to push people into employment.” The FI asks Kermode, what she believes government can do to change her opinion
While UK wages have risen at a record annual pace by 7.3% from March to May year-on-year, they still trail inflation (8.7%), according to ONS figures published in July.
Julia Kermode, Founder of IWORK suggests that the government is increasingly making policies that are hurting the self-employed. One way she proposes the government could prove her and millions of freelancers wrong is to raise the minimum trading allowance from £1,000 to £3,000 which would give millions of people a financial lifeline.
Tripling this allowance from £1000 to £3000, which is the maximum amount an individual can earn via self-employment before tax, would “give millions a financial lifeline,” says Julia Kermode, founder of IWORK, and advocacy for independent and temp workers.
IWORK’s recommendation comes as more of the UK’s population start side hustles to boost their income.
A study of more than 900 workers suggests that the number of people considering side hustles or freelancing to cope with soaring costs has tripled in the past 12 months – from one in ten to one in three (Aspire).
“It’s clear that the government needs to think creatively about how it can support the growing number of people starting side hustles to make ends meet,” says Kermode.
Kermode’s argument is that the more side hustlers can earn, the more they can pay their bills when interest rates have gone up consecutively for 13 months.
She explains, “It’s not like increasing this allowance would leave a gaping hole in HMRC’s pocket, either. If anything, encouraging more people to start their own businesses would be rocket fuel for the economic recovery.”
Frosty reception for freelancers
The Freelance Informer asks Kermode if she believes the government is inadvertently discouraging people to have side hustles with the combo of the lower trading dividend allowances at a time when the cost of living is soaring.
“In recent years the tax system has become quite unfriendly to self-employed workers,” says Kermode, “with the government clearly looking to push people into employment.”
She continues, “This is incredibly short-sighted though and doesn’t just disincentivise self-employment and impact whether or not people can pay the bills, it will stunt economic growth.”
Some MPs are also finding fault in Off-Payroll and IR35 legislation that in their estimations ultimately hurts the economy. Robert Buckland, MP for South Swindon, says IR35 and Off-Payroll legislation has become “burdensome” and “complex” in nature becoming a “Frankenstein’s monster.”
“The deleterious impact it has had on dynamism, entrepreneurship, jobs and growth means that there is no better time to slay it once and for all,” writes Buckland in A Conservative Home Comment.
