In his upbeat Budget speech to the House of Commons today, Rishi Sunak told MPs that “growth is up, jobs are up and debt is down” and the UK economy is recovering faster than expected.
He said: “Employment is up. Investment is growing. Public services are improving. The public finances are stabilising and wages are rising.
“Today’s Budget delivers a stronger economy for the British people – stronger growth, with the UK recovering faster than our major competitors.”
In a bid to help businesses recover from the pandemic, Sunak announced that the planned increase to business rates in England and Wales next year will be scrapped and pledged to evaluate rates more often. He also revealed a 50 per cent rate cut for businesses in the retail, hospitality and leisure sectors.
While the move to reduce rates has been welcomed, many industry experts say the chancellor’s spending review overall has “done nothing to reassure” the self-employed, particularly those who work remotely or do not have a business premises.
Derek Cribb, CEO of self-employed trade body IPSE, said: “After the severe and disproportionate financial impact of the pandemic on the self-employed sector, this Budget provided an opportunity for the Chancellor to show his support for those who work for themselves.
“While the commitments he made today on investment in infrastructure, innovation and skills, are welcome, there is far too little in the Budget that would directly support the self-employed.
“We are grateful there were no new tax rises, but disappointed the chancellor didn’t take the opportunity to further simplify and reduce working taxes. Instead, we had a promise that tax would come down by the end of the Parliament but no indication of exactly how.”
Seb Maley, CEO at tax specialist Qdos highlighted that “much of the damage had already been done” as many of the major tax hikes had already been announced in the weeks prior to today’s Budget speech.
Last month, the prime minister confirmed that national insurance contributions and dividends tax will increase by 1.25 per cent from April 2022. The move, which broke the Conservative party manifesto pledge, was slammed by critics as “idiotic” and would hit already struggling self-employed people.
Maley said: “There are two ways to view this Budget. On one hand, it’s a relief there are no major tax changes affecting the self-employed. On the other, many will feel the damage has already been done.
“The recently announced social care levy, corporation tax changes in 2023 and IR35 reform have and will hit freelancers, contractors and small business owners hardest. And the cut to business rates, while welcome, won’t be felt by those who work remotely and don’t want or need premises.
“In his speech, the chancellor was self-congratulatory about the government’s treatment of entrepreneurs. This is now a tired out, unconvincing rhetoric.
“Sparing the self-employed in this Budget speech doesn’t paper over the cracks. These workers are bearing the brunt of short-sighted, quick-fix tax reforms that endanger this vital cog of the economy, rather than support it.”
Clarke Bowles, director of strategic sales and Parasol Group also pointed out that the government had released “under the radar” a 1,300-word document titled Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme, ahead of the Budget.
He said: “Although this is certainly a step in the right direction for contractors looking to work for compliant umbrellas, releasing the document ahead of the Budget simply underlines the need for the government to do more to prioritise the contractor community.
“We’d hoped to see further talks around improved regulation for umbrellas, but it seems that this isn’t on the government’s priority list at the moment.”