The Association of Independent Professionals and the Self-Employed (IPSE) has released its new manifesto, which echoes calls from Umbrella Company trade association PRISM for a strategic review of the UK’s outdated tax system.
IPSE’s Policy Development Manager, Jordan Marshall, described the existing legal framework for determining employment and tax status as “rooted in the master-servant relationships of the Middle Ages” and incapable of taking proper account of the rising number of people who are choosing to work flexibly on a series of “gigs.”
Current estimates from the RSA suggest that 1.1 million people in the UK are regularly picking up short-term jobs via crowdsourcing jobs sites such as PeoplePerHour.com and Freelancer.com and apps for completing physical tasks such as Deliveroo and Uber. This number, Marshall predicts, is only going to expand in the years ahead.
He said, “Our tax system is also coming apart at the seams as new ways of working are forced into an outdated model. The last Government’s disjointed attempts to deal with this resulted in a number of misjudged polices that hit the self-employed, including the disastrous changes to IR35 in the public sector, the National Insurance debacle and onerous Making Tax Digital plans.”
As a result, IPSE believes that a root-and-branch review chaired by an independent expert is necessary to take full account of modern working practices and accommodate them fairly within a reformed tax system.
There are 4.8 million people in the UK who categorise themselves as self-employed, a significant proportion of whom are skilled contracting professionals working via Umbrella Companies or personal service companies. The latter bring their unique knowledge and skills to countless projects in both public and private sectors.
For this reason, IPSE is calling for a new statutory definition of self-employment. Its CEO, Chris Bryce, said that this is now necessary “to end widespread confusion and ensure working for yourself remains an attractive and attainable career choice.”
IPSE suggests the following key principles that such a definition should encompass:
- Autonomy in work
- Control over working arrangements
- Taking on business risk
- Level of independence from clients
The manifesto urges the Government to make painstaking considerations before any attempt to extend IR35 changes to the private sector proceeds and to create a bespoke tax system for professional contractors. It also asks for Making Tax Digital to be simplified and for action to improve pension provisions, ensure fairer parental benefits and increase access to the Lifetime ISA.
Additionally, IPSE wishes to see further tax-deductible training for new skills, incentivised use of workhubs for contractors and improved infrastructure, including faster broadband nationwide.
The manifesto, A Contract with the Self-Employed, can be read here.