The self-employed shouldn’t be stung with more taxes

Published by The Times (7th March, 2017)

Seven years ago I joined the swelling ranks of self-employed workers in Britain after a quarter century in the corporate world. This was a deliberate choice, although driven by workplace changes. I wanted to do something different, going back on the road as a writer after years stuck in offices editing other people’s copy.

There are many benefits to being your own boss, from ducking out of dreary office politics through to enjoying a swim when public pools are empty. But there are also definite disadvantages: the rollercoaster nature of work, nagging pressure to earn, endless piles of paperwork and no holiday or sick pay.

Most fellow executives thought I was mad giving up job security amid the digital disruption engulfing the media. But after talking to friends in the music world, with its more advanced dislocation, I calculated that the risk could pay off. So far, so good — although as a freelancer, anything can happen tomorrow.

I am far from alone in this new world. The numbers of self-employed workers in Britain soared after the 2008 financial meltdown and, despite low unemployment, remain far higher. This is bad for the economy since they earn lower pay, are typically less productive and have smaller pensions. But it is beneficial for people themselves and wider society, since they tend to be happier and report higher job satisfaction.

Now the Treasury wants to get its claws on our cash. Spin doctors peddle stories of fat cat consultants and lawyers ripping off the exchequer. They point to studies showing that self-employed workers have an average tax advantage of £1,240, with much bigger savings for high earners, especially if using private companies to dodge tax.

In his budget, the chancellor Philip Hammond is expected to drive up self-employed national insurance rates to equalise them with those of employees, then soften the blow with a wider review into labour market changes. He talks about fairness — usually code for higher taxes when coming from a chancellor’s mouth.

Yet who really are the self-employed? They are more likely to be scrabbling around the gig economy than to be well-paid barristers. Many are women, fitting in work around families, or older workers, padding out inadequate pensions. One in five rely on tax credits to top up low earnings.

Mr Hammond should pause before acting rashly. Britain’s self-employed workers are natural Tories, whether by choice or not, fuelled by a sense of individualism and spirit of entrepreneurialism. So where is the sense in whacking this surging army of supporters that inject dynamism into our economy?

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