Treasury outlines new plans for self-employed

Friday 4 December 2015

The Autumn Statement spending review highlighted a number of keys areas that could directly affect freelancers and those who are self-employed. Now further information has been published on how the government will classify and distinguish between the various different types of self-employed professionals in the future.

In his statement, chancellor George Osborne outlined how the government plans to proceed with its overhaul of employment status.

This will include the creation of a new cross-government group that will be tasked with the issue, as well as the development of a new employment status portal and a helpline. In addition to this, there will be new guidance for those who work closely with self-employed professionals.

Earlier this year, the Office of Tax Simplification (OTS) Employment Status Review recommended 28 different actions for the government to take, including creating a new portal and publishing more guidance for self-employed people.

During the Autumn Statement, Mr Osborne said that the government would be taking some of the recommendations from the review on board. However, the chancellor did not specify which ones it would not be considering or explain anything about the potential of creating a new Freelancer Limited Company.

A letter from Treasury minister David Gauke has clarified some of the areas the government will be further exploring.

Writing to the OTS, he said the government had agreed to 17 of its recommendations and it will be considering a further six. Four of the proposals from the review have been rejected, which could have been of some benefit to contractors and freelancers.

The letter reads: "The government is simplifying the tax system in other ways. To simplify National Insurance contributions (NICs) for the self-employed, the government intends to abolish Class 2 NICs and reform Class 4 NICs.

"The government continues the review of tax rules for travel and subsistence expenses with a view to modernising these rules to reflect current practices."

Mr Gauke also says that new draft legislation will be published early next week (December 9th), which should give further insight information on what self-employed professionals can expect in the future.

However, until this is published, people will have to "wait and see", according to former tax inspector and co-founder of IR35 advisory Bauer & Cottrell.

Speaking to Freelance UK, she said only when the draft legislation is released will people see if the proposal has been dropped.

She said: "My message to contractors and freelancers, as always, is to consider their positions especially if they are reliant on relief for Travel and Subsistence costs and their contracts go past April 2016. Now is also the time to consider their IR35 positions… to establish what potential financial risks they are facing in the future."


By Victoria McDonnell

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