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Comment: Self employment rule change Watch out, ADIs, rumour has it Rishi’s got his eye on you... The benefits of the self-employed career are few and far between at times... and now it looks like the Chancellor may be closing a few of the good parts down, as he seeks a way to restore the nation’s finances. Rod Came looks at the issues The pleasures and benefits of selfemployment are manifest and appreciated by those who enjoy success from their chosen field. But there are disadvantages and while many can be overcome by the individual, some are beyond their scope. People who work for an employer have a wage structure, holidays, sickness pay, set hours of work and overtime rates, among other benefits. Their income tax, pension and National Insurance are taken from their salary before they receive their take home pay. Everything is organised by the employer. Conversely, self-employed people do not benefit from those advantages. They do not have a wage structure, their take-home pay is entirely dependent on the amount they have collected from their labours after numerous deductions. There is no holiday entitlement, in fact most self-employed people often do not take holidays because time off work means a loss of income. it’s the same A mocked-up photographic interpretation of a future plea from the Chancellor... with sickness; self-employment is the best cure for the common cold. Unsocial hours and overtime do not exist in the self-employed world; often they are the norm; 9 to 5, Monday to Friday is a fantasy. Most people who work for themselves take on far more work than they should, because of the irrational fear that when they wake up tomorrow all their clients will have gone. An ADI’s take-home pay is what is left from the fees collected after all expenses have been deducted. These soon mount up, too: car purchase/lease, fuel, phone, insurance, maintenance, broadband, accountancy, advertising, MSA GB fee and other one-off expenses. So why am I telling you what you already know? Because change is coming. The Chancellor, one Rishi Sunak, the chap who has been so generous to workers by way of furlough payments throughout the Covid pandemic, including to the self-employed, has now signalled that he wants the money back because the UK bank account is in a parlous state. He doesn’t have too many options to claw money in from, but one that has been causing concern for sometime is the status of being ‘self-employed’. Unfortunately, a system that has trundled along to most people’s benefit for many years has been misappropriated by a few who saw a loophole to use to their advantage. They include people who decide to ‘retire’ and then next day return to the same employer, doing the same job, but now as a self-employed ‘consultant’, thereby gaining the few benefits that self-employment bestows. They’ve been drawing attention to themselves. From Rishi’s point of view he feels that he is losing out on the reduced National Insurance paid by those under retirement age. He’s also upset that they put legitimate business expenses against income, reducing their tax liability. Hence, the rules are changing. Firms are no longer hiring consultants who they can hire and fire at will. This used to benefit both the consultant and the employer in that it is very flexible. Employers who need occasional labour do not want to go though the rigmarole of hiring permanent staff who they know they will only want for a specific purpose, or a relatively short time. As a consequence many people who were quite happy to work on that basis are now losing out. ‘‘ Change is coming.... Chancellor Sunak has signalled he wants the money back because the UK bank is in a parlous state ‘‘ 16 NEWSLINK n APRIL 2021
For all the latest news, see www.msagb.com Other changes are heading our way. You will have read that Über has now been judged to be an employer of the drivers who operate under its flag and must pay them the minimum wage and other employee benefits. That is only one company, the tip of the iceberg, as there are many other employers in different fields that could be affected by this judgement. So it’s time to look at what it really means to be ‘self-employed.’ The Government says you’re probably self-employed if you: • run your business for yourself and take responsibility for its success or failure • have several customers at the same time • can decide how, where and when you do your work • can hire other people at your own expense to help you or work for you • provide the main items of equipment to do your work • are responsible for finishing any unsatisfactory work in your own time • charge an agreed price for your work • sell goods or services to make a profit. Continued on page 18 NEWSLINK n APRIL 2021 17
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