Chancellor Rishi Sunak is expected to announce new taxes on online deliveries and freelance workers in tomorrow’s Budget, largely aimed at helping to pay off the UK’s Covid spending. Moreover, he may up taxes for self-employed people.
The taxes are aimed at targeting online firms like Amazon, Boohoo and Asos, which have seen profits soar over the past year, after people spent much of 2020 in lockdown.
Plans to increase national insurance contributions by self-employed Brits are also on the cards, a move Sunak first touted last year when he announced a new Covid support scheme for self-employed workers.
However, the Association of Independent Professionals and the Self-Employed (IPSE) has reacted with shock and horror to the reports, telling City A.M. that, rather than to be taxed, the self-employed “badly need support” and that a tax rise on them now would be “crippling.”
“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,” said Andy Chamberlain, director of policy at IPSE.
“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,” he told City A.M.
Advice from Treasury Select Committee
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, namely not to include an increase in self-employed taxes in the upcoming Budget.
Instead, the lobby group calls on the government to expand support for a “desperately struggling” self-employed sector, including by expanding the criteria of the Self-Employment Income Support Scheme (SEISS).
“Many in these groups are now desperately struggling and badly need support after nearly a year of hardship,” Chamberlain said.
He also warned that pushing ahead with the changes to IR35 self-employed taxation will do serious damage to the sector at the “worst possible” time as he called on the government to urgently “delay and rethink” the changes.
“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.”
Instead, he said the 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,” Chamberlain concluded.