PCG works to define freelancing

Monday 14 April 2014

A recent roundtable hosted by the PCG and think tank DEMOS has attempted to define freelancing in order to help policymakers better legislate for the self-employed.

Pinning down a precise definition of freelancers has been contentious in the past, but the lack of a clear explanation that can be uniformly applied has caused problems in the areas of tax and employment law.

In a blog, George Anastasi, policy development coordinator at the PCG, explained that the roundtable covered issues such as changes to the tax system and how to exclude vulnerable workers but not make life difficult for those that have chosen to go solo.

The findings from the discussion will be used to create a report, which will form a foundation for the PCG's manifesto for the 2015 General Election.

Mr Anastasi claimed this is important as it will ensure the voice of freelancers is heard by the next government.

However, before the industry can move forward, a clear definition is needed for the tax and legal system.

Mr Anastasi explained that currently tax laws like IR35 cause problems for freelancers because "the entire legal and tax system is set up to cope with employees and employers".

With the self-employed often not falling within either of these definitions, there is a gap that causes problems.

Part of the issue is that the existing tax system originates from a time when employment was more regimented and the majority of people worked as either an employer or employee.

This is no longer the case and research has consistently showed that more and more people are choosing to go self-employed.

What's more, businesses have a greater need for temporary workers to give their organisations greater flexibility and access to skills.

Indeed, freelancers have a vital role to play in the UK's economy. According to professor Andrew Burke of Cranfield University, freelancers are important driving forces for innovation and entrepreneurship, which the British economy relies on for growth.

Consequently, clear policies need to be made that not only define and recognise self-employed individuals, but support their way of working to facilitate growth.  

The need for effective legislation will only intensify as more and more people choose to become contractors - a trend that is prevalent in the UK.

Indeed, strong market conditions are making freelancing an attractive option for highly skilled professionals.

The latest 'Freelancer Confidence Index' from the PCG showed that 20 per cent of contractors believe their business to be better off now than it was three months ago, while 17.9 per cent have experienced rising revenues.

A massive 70.1 per cent expect the economy to improve over the next 12 months, indicating that more growth in on the way.

During the coming year, 33.5 per cent of contractors expect their business to improve, while 26.7 per cent anticipate their rates to rise.  

Currently, the average daily rate for a contractor is £500 - something Georgios Nikolaidis, economic policy adviser at the PCG, claims is a healthy sum that "reflects the high value placed on freelancers by their clients."

By Victoria McDonnell

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