When Lisa and I started this website, we did so because we could see an opportunity to do something we love and are good at, working around family life, in a way that employment never quite does.
Being self-employed means that if our kids are sick, we can be there for them. If we want to do school drop-off and pick-up, we can. We can stick a wash on and then bash out 800-word blogs, we can do conference calls while paying the window cleaner and we can work til 1am if we want so that the next morning, we can go to Sports Day.
You may think that sounds like a jolly but I promise you – I work harder now than I ever did when someone else was paying me for my time. I am hyper-efficient, super-productive, wired almost constantly as a result of the need to make every second count.
18 months ago, I was pretty nervous about becoming self-employed. If you’ve always been employed, it is a big risk. Will you get enough money through the door? Will people pay you on time? Will you be able to manage the various tax returns, VAT filings and other onerous bits of bureacracy on top of the actual business?
I always thought the Government wanted to encourage people like me to take their own initiative – to join the army of self-employed workers literally propping up the UK economy. Chancellors in the past have always enjoyed demonstrating that they champion Britain’s entrepreneurial army, the “engine room”.
Without small businesses, there would be no UK economy. There are 5.5 million private sector businesses in the UK of which 99.3% are small businesses. Three-quarters of UK businesses do not employ anyone aside from the owner, according to Rosie Bullard, Investment Manager at James Hambro & Partners.
This number is growing as more and more people realise the life/work balance benefits of becoming self-employed: primarily greater flexibility around working hours and no need to commute on delayed trains for four hours a day (I’d love to see the figures on how many Southern rail commuters have decided to jump ship and go it alone in the last year).
But things seem to have taken an about-turn recently. Now, the Government seems to view the growing numbers of self-employed people as some sort of scourge to be wiped out – a threat rather than a blessing.
Yesterday’s announcement of a reduction in the dividend tax allowance from £5,000 to £2,000 in April 2018 is a big deal for those paying themselves in dividends – ie. most self-employed directors.
The 1% increase in Class 4 NICs from April 2018 is also a direct hit on the self-employed.
These changes come on top of the erosion of the VAT flat rate scheme, a scheme which made it possible for self-employed people to register for VAT and be marginally be better off as a result of filing VAT returns than if they did not. These changes come into effect next month and some have predicted a wave of small businesses de-registering from VAT as a result.
Seeing the rise of the so-called “Gig Economy”, the Government apparently wants to equalise tax treatment so that there are no particular tax advantages to going self-employed over being employed. That would be fair enough, except it is not a fair reflection of the risks that self-employed people face compared to those who are employed – the lack of benefits, the lack of security, the extreme vulnerability to the rest of their business network and the UK economy.
Small tax advantages used to act as an incentive for people to take this laudable risk. Now it seems the Government has decided that enough people are taking this risk, thank you, and we need to stem the flow of talented staff from the UK corporates, which, by all accounts, have been getting a bit antsy about all of their top bods deciding that the freelance rather than wage-slave life is for them.
Big PLCs have been doing everything they can think of – making offices more like home through soft furnishings, coffee makers and ping pong tables, in-house nurseries, offering home working – to stop this leakage. Now it seems they have turned to the Government to do the work for them.
The worst thing about it, of course, is that the tax grabs disproportionately affect women with children who have gone self-employed in order to better manage the demands of work and home life, like me and Lisa. If we were to work for large firms, full time again, we would have to shell out tons for childcare and would never see our kids. But for us to try to achieve the best of all worlds is apparently not what the Government wants.
The Women’s Budget Group, set up to assess the impact of Budget measures on women in particular, noted that the Government has failed to conduct its own gender impact assessment of its own measures. Dr Mary-Anne Stephenson, of the Women’s Budget Group, said: “The Chancellor and Treasury have again failed to undertake a robust equality impact assessment of the Budget, despite their obligations under the Equality Act and calls from the Women and Equalities Select Committee to improve its reporting of equality impact. Without such an assessment, the government cannot fully understand the impact of its decisions on different groups, including impact, or how to minimise unintended negative impacts.”
Perhaps such an assessment would reveal what we self-employed women now know all too painfully – that you are now damned if you do go self-employed – and damned if you don’t.
