Shortly before the Budget every year, the Office for National Statistics releases a snapshot of the UK’s performance. The Economic Indicators, as they’re known, include such measures as unemployment, GDP change and rate of inflation. Think of them as a scorecard for a Government’s last year. Poor results from these economic measures almost always means a tough time for the Chancellor of the day when the dispatch box beckons and the tatty red briefcase is opened.
So it was excellent news for George Osborne last Wednesday morning when, shortly before he delivered the 2014 Budget, the ONS announced that employment across the UK had grown by 105,000 in the three months to January 2014, driving unemployment down to 7.2%. The devil was in the details, though. Traditional, full-time employment actually dropped in the quarter by 60,000 – had Osborne entered the Commons chamber with that statistic freshly published the Opposition would have eaten his lunch. Thankfully for dear Gideon, 211,000 people across the UK chose self-employment between November and January, so he was able to deliver the 2014 Budget with his head held high, with all his economic indicators pointing in the right direction. It’s no exaggeration to say the UK’s freelancing and contracting population are driving the economic recovery – now we’re also saving the Chancellor’s blushes.
Given one-person businesses are the largest individual business group as well as the fastest growing, the time seems right for Osborne to get behind us – PCG suggested he do just that in their pre-Budget wishlist. Unfortunately the Coalition Government has an awkward history of managing to kneecap freelancers, or miss entirely, with their rather scattershot approach to business regulations.
The Employment Allowance, a flagship scheme entitling businesses to £2,000 off their Employer National Insurance payments, only applies to Class 1 payments. Freelancers, and sole traders in particular, pay Class 2 and Class 4 National Insurance and so cannot take advantage of the Government’s much-vaunted #2kcashback.
Similarly, the troublesome Agency Workers Regulations, introduced hurriedly back in 2011, was never intended to apply to freelancers but still knocked the Umbrella and recruitment industry for six.
But we saved Osborne’s bacon! He owes us… right?
A variety of tweaks and changes were announced last week, including a further increase in the Personal Allowance (from £10,000 this April to £10,500 in April 2015), higher ISA limits for savers, relaxation of pension rules for retirees, and even air passenger duty reform to reduce the cost of doing business abroad.
Unlike previous Budgets, the self-employed even warranted a mention! Osborne announced a change in the way Class 2 National Insurance contributions are paid. No longer will we be burdened with weekly Direct Debit payments of £2.70 – we’ll now be able to pay our Class 2 NICs in bulk when we complete our Self Assessment.
Just to be clear the Chancellor announced, while seated firmly on the coattails of the self-employed, a slight change to how we pay our taxes. Not a reduction or a new allowance – just a small administrative change.
Maybe next time, eh?
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