I’m self-employed. Alternatively, I can (and do) legitimately describe myself as the owner of a business. But, as the only participant in a sole trader organisation, self-employed is a good description.
Perhaps you have the same status, or a similar one. If so, you’re probably concerned by Chancellor Philip Hammond’s recent pledge to crack down on the “synthetic self-employed”. So who will be affected, what will happen — and how on earth can self-employment be “synthetic”?
Self-Employment and the Gig Economy
Self-employment can be equated with being freelance, another term I sometimes apply to myself. The term freelance actually goes back to mediaeval times, originally referring to a knight who wasn’t sworn to any king or lord. Thus his lance was free to fight for whoever paid him.
Whether I call myself small business, self-employed or freelancer, central to my status is that I work for a wide range of clients. At the last count (some time ago) my client list stood at around forty and growing all the time.
On the other hand, there are other people who officially have the status of self-employed without being freelance. They’re tied into a contract with just one company. There’s been a considerable amount of debate in recent times about the so-called gig economy, perhaps most notoriously concerning Uber.
Most of the debate has been about the rights of the people involved to paid holidays, sick pay and the like, but the Chancellor has now turned his attention to what HMRC is receiving from the self-employed.
What Are the Changes?
The basic change Philip Hammond is proposing involves national insurance contributions. Self-employed people pay less than employees, and the government attempted to put this up last year but had to back down. After all, the Tories like to portray themselves as champions of enterprise.
On the face of it, this is less controversial, merely tightening up the definition of “self-employed”. This would bring “off-payroll” contractors under the IR35 tax rules that control employees’ tax, raising a considerable amount of revenue for the Treasury.
The problem is that such measures by the government (any government) has a tendency to sweep up the good, the bad and the ugly all in one go. While there may well be justification for reforming the gig economy in various ways, the genuinely self-employed have a relationship with their clients that’s fundamentally different from the relationship between employer and employee.
To give a parallel, no-one would claim that Barclays Bank is an employee of Nick Blatchley Copywriting because they provide my banking services. In the same way, I’m not an employee of any of my clients — and, much as I like and value them, that’s the way I want to keep it.
If these changes do go through, let’s hope they’re administered by someone who understands the difference between real and “synthetic” self-employment. Or at least that they define exactly what that phrase means. Otherwise, they’ll be stabbing the small businesses they’re supposed to be championing in the back.
Image by Ken Teegardin under Creative Commons Licence