BUDGET 2017 Bad news for SMEs as self-employed risk takers penalised, experts warn
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Paul Skeldon
8th March 2017
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The latest budget has upset most in the ‘digital’ community as it seeks to penalise entreprenuers, self starters and people running their own small and micro-businesses with business rate hikes and upping National Insurance from 1% to 10% for the self-employed.

According to UKFast CEO Lawrence Jones MBE: “The move to reduce taxes for the self-employed is unquestionably a decision which reduces the incentive for risk takers. It’s these small entrepreneurs that drive the economy and often become the ones who build the SMEs and fast-growing startups we all want to see thriving. It’s grossly unfair to claim they’re levelling out the tax to balance with employees when employees get so many extra rights like sick pay, holiday, pensions and maternity pay. How much is that worth? I’d be thinking ‘why take the risk?”

Ed Molyneux, CEO and co-founder of FreeAgent – who make award-winning cloud accounting software for freelancers, micro-businesses and their accountants – is even more vociferous: ““The decision to delay Making Tax Digital for a year for all businesses with turnover below the VAT threshold is very welcome. This is the biggest change to UK tax in a generation, affecting millions of business owners – many of whom have been calling out for more details about who will have to comply with the legislation. This extra time should therefore enable the switchover to digital tax goes smoothly and ensure that micro-business owners are able to easily comply with the new legislation. 

“However, there is little else in the Budget for the micro-business sector to be positive about. In particular, the decisions to raise National Insurance and to cut the dividend allowance will be potentially devastating for freelancers and contractors across the UK,” he says.

Molyneux  continues: “It’s also disappointing to see that there has been no u-turn over the forthcoming reform to IR35, which as of April 6th will see public sector employers having to deduct tax and national insurance contributions from contractors’ pay at source, rather than allowing them to defer and claim expenses. We are worried that the government increasingly sees the self-employed as an easy target. It is very unfair to position freelancers and contractors as not being on a level playing field with those who are employed. These business owners have none of the employment rights or the security that employed workers do and there must be some recognition for that – unless they want to cripple this very important and growing part of the UK economy.

Molyneux concludes: “We know from our own research that over two thirds (68%) of freelancers, contractors and single-person businesses do not feel that the government provides enough support to them, while just 7% think that it does. It’s clear from the Budget that this negative sentiment appears to be justified.”

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Author: Paul Skeldon
Editor specialising in all things mobile.
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