Home Business News General Election 2024: Parties urged to consider self-employed ‘tax shake-up’

General Election 2024: Parties urged to consider self-employed ‘tax shake-up’

28th May 24 11:35 am

As polling day is set in stone and politicians prepare their manifestos, they are reminded that the self-employed are a vital section of the electorate whose support could prove crucial.

With a general election confirmed for 4 July, the major political parties are getting on a war footing.

Against this backdrop, politicians are being urged to consider the needs of all their constituents – including the UK’s 4.2m self-employed workers – who have been the target of aggressive tax raids in recent years.

Qdos, a tax compliance specialist and insurance provider for flexible workers, has recommended a self-employed “tax shake-up” – which could win any political party the support of freelancers, contractors, the self-employed and those with side hustles.

Raise the tax-free trading allowance

A tax-free trading allowance of just £1000 per year for those with side hustles does little to encourage or reward self-employment.

Qdos CEO, Seb Maley, said, “Increasing the tax-free trading allowance would put more money in the pockets of those who have turned to side hustles or self-employment to ride out the cost of living crisis.”

Rethink Corporation Tax rate

Increased from 19% to 25% under the current government, this sees small business’s profits subject to higher tax rates with negligible marginal relief available.

“The introduction of a small business rate for Corporation Tax has offered the smallest operators some respite – but the jump to 25% tax on profits for others has widely been seen as a regressive hike. At the very least, a commitment to revisiting the increase would be welcome.”

Address IR35’s flaws 

Having handed the responsibility for determining ‘IR35 status’ to businesses, the controversial off-payroll working rules have left many freelancers and contractors with no option but to work on the payroll – and take up to 30% less home after tax.

“Taking a fresh look at the IR35 rules is paramount. Whether it’s making sure businesses are carrying out fair and compliant IR35 status assessments or fixing HMRC’s fundamentally flawed IR35 tool, change is needed.”

Increase tax-free dividend allowance

This has been slashed by 90% in just 7 years, an aggressive move that has seen company directors facing a tax grab on their earnings.

“Another example of the self-employed being targeted for tax revenue, an incoming government should revisit the repeated cuts to the tax-free dividend allowance. It’s vital that those working via their own limited companies can enjoy the rewards of their work – rather than seeing more and more of it swallowed up by the taxman.”

In conclusion, Maley added, “In recent years, the self-employed have been taken for granted – from the lack of support during the pandemic to numerous tax raids. A major tax shake-up is needed.

“Approaching the general election, politicians need to understand the frustrations and concerns of these voters. The silver lining for the major political parties is that there are plenty of options to choose from, which could make an immediate and significant impact.

“Savvy politicians will see those challenges as opportunities to address concerns and win votes in the run-up to polling day.”

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