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"Crippling Tax Raid" on Small Businesses and Self-Employ Feared

Businesses need support not tax raids

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The self-employed "badly need support" not a "crippling" tax raid says organisation representing independent professionals and the self-employed.

Ahead of the Spring Budget on Wednesday, the Association of Independent Professionals and the Self-Employed (IPSE) has warned the government that the self-employed "badly need support" and that a tax rise on them now would be "crippling".

Citing the importance of the self-employed sector for economic recovery, IPSE has urged the government to follow the advice of the Treasury Select Committee and not include an increase in self-employed taxes in the upcoming Budget.

"After the drastic financial impact of the pandemic, there is no doubt that a tax raid on the self-employed sector right now would be crippling. Any rise in Corporation Tax would also do severe damage to the many freelancers who work through limited companies. Above all, it would be deeply unjust to raise taxes on the self-employed to pay for support that at least a third of the sector simply could not access," says Andy Chamberlain, Director of Policy at IPSE.

Chancellor of the Exchequer Rishi Sunak is widely tipped to raise corporation taxes on Wednesday, or at least signal tax rises are coming.

Sunak says that the significant sums spent on providing support during the pandemic would require consolidation of the countries finances.

However, the Conservatives have ring fenced VAT, income tax and fuel duty from potential increases, meaning companies are open to a tax raid.

IPSE meanwhile calls on the government to expand support for the "desperately struggling" self-employed sector – including by expanding the criteria of the Self-Employment Income Support Scheme (SEISS).

IPSE has warned that pushing ahead with the changes to IR35 self-employed taxation will do serious damage to the sector at the "worst possible" time.

It has called on the government to urgently "delay and rethink" the changes – and, again, backed the Treasury Select Committee’s calls for a full review of the taxation of the self-employed sector that would make the changes to IR35 redundant.

In a submission to the Treasury ahead of the Budget, IPSE have called on the government to urgently delay and rethink the changes to IR35 self-employed taxation.

"These changes were delayed last year because government recognised the sector was not prepared for them and that, with the impact of the pandemic, they would harm the self-employed and the economy. The situation is no better now: and, in fact, now would be the worst possible time to introduce these changes," says Chamberlain..

Chamberlain says the innovation and flexibility of the self-employed sector will be vital for economic recovery after the pandemic.

"For that to happen, however, government must take a long view and nurture and protect the flexible workforce now for the good of the economy and the country. It must not – as some reports suggest – seek short-term gain at the cost of long-term pain," he adds.