Spring Budget 2023: Chancellor offers self-employed next to nothing

Jeremy Hunt yesterday lumbered the self-employed with a threadbare Spring Budget 2023.

As the chief accountant to FreeAgent, Emily Coltman, put it to FreelanceUK, the chancellor unveiled “not a huge amount of” changes for freelancers.

She says negative proposals were scant except that a new “full expensing” policy allowing each pound invested in IT to be fully deducted from profits, will be off-limits to sole traders.

'Entrepreneurs will be left disappointed at Spring Budget 2023'

But positives for people who have gone it alone were scant too, meaning “entrepreneurs will be left disappointed” if they expected Hunt’s help, says Nimesh Shah of Blick Rothenberg.

The Association of Independent Professionals and the Self-Employed has now confirmed that by virtue of being a sole trader, freelancers will find very little support from the chancellor.

“There is nothing in Spring Budget 2023 which directly impacts those working for themselves [in a good way],” the association’s Andy Chamberlain told FreelanceUK.

“Considering this was a Budget focussed on labour market participation, it’s disappointing there was nothing [to boost] the most dynamic part of the workforce – the self-employed.”

'Complete absence of anything to the self-employed'

Rebecca Seeley Harris, a lawyer serving one-person firms, unfortunately agrees, telling FreelanceUK that Hunt offered “a complete absence of anything to the self-employed”.

But help on energy bills was extended until June, giving freelancers who work from home the peace of mind that the Energy Price Guarantee will stay at £2,500, saving most homes £160.

FreeAgent, IPSE and Kevin Hollinrake MP, under-secretary of state for enterprise and markets, each identified this ‘bridging of the gap’ until bills naturally reduce as key for tiny traders.

'Childcare package long overdue'

The trio also backed Mr Hunt’s decision yesterday to promise that 30 hours of childcare a week will be extended to working parents of children aged 9 months to four-years-old.

But while appearing well-intentioned, the offering by the chancellor appears to have as many supporters as it does critics, in just the 24 hours since it was announced.

With independent workers who are parents 'not getting any specific support' from Mr Hunt, provision of childcare may help but is also “long overdue,” says Nicole Slowey of Qdos.

'Good news for freelancers who are parents, surely'

Olivia Sear, who like Slowey specialises in freelancing compliance, said the “sensationalist” chancellor omitted the fact the childcare will not be fully available until September 2025.

At IPSE, Mr Chamberlain insists that more support with childcare has got to be “good news for freelance parents” as it surely means “more time working and growing their business.”

But the boss of an accounting firm serving freelancers, Lousie Rayner of Number Mill, is another who dislikes how the childcare announcement was trailed, then packaged.

'Excitement, then an excuse'

“I was excited for my team who have young children who thought that free childcare was imminent only to [learn]…that mostly they won’t benefit until 2025,” she told FreelanceUK.

“The excuse from the government being they need time to get infrastructure in place. Don’t tell me that providers couldn’t get the infrastructure in place if the funding was immediate.”

Sounding attuned to both the clear benefits but also the challenges of the childcare package is the Recruitment & Employment Confederation’s CEO Neil Carberry.

'Entrenched labour shortages'

“The childcare changes will be helpful for the jobs market and pay for themselves over time as parents stay in higher paying jobs,” Mr Carberry began.

“But we also need to make sure the provision is in place for parents to get what they have been promised.

"The implementation of the childcare changes won't come quickly enough to help businesses and industry overcome entrenched labour shortages in the current economic slowdown.”

'Free childcare is potentially game-changing'

Terry Payne, global managing director of Aspire is optimistic however.

“Major reform to free childcare allowance is potentially game-changing -- a catalyst for those returning to work," he says.

“Doing more to help parents, over 50s, those with disabilities and many others get back to work is the right move at the right time. Employers will also benefit from access to a wider and increasingly diverse pool of talent.”

'Day one flexible working right'

And employers – or ‘engagers’ in freelancer terminology – will get help from the government to more readily understand “the benefits of offering flexible working.”

Following a call for evidence, Spring Budget adds that the statutory framework for flexible working will be revised to offer “a day-one-right” for staff to request working flexibly.

Staffing boss Alan Lowdell told FreelanceUK: “More clarity is perhaps required on reforms to flexible work. Maybe there should be a requirement that it should be included in job adverts.”

'Flawed IR35 reform didn't get a look-in'

But it is today’s labour market flexibility which is troubling Qdos’ Ms Slowey, in light of the chancellor yesterday ploughing on with the off-payroll rules without so much as a mention.

“IR35 [reform] didn’t get a look-in,” Slowey said, aware that in September 2022, the chancellor at the time moved to repeal the framework, saying it was costly and burdensome.

“It’s no secret that IR35 is flawed, with the off-payroll working rules creating challenges to engaging flexible workers. The government knows this but [now] refuses to take action.”

'Off-payroll rules still a widespread issue'

Taking to LinkedIn last night, CoComply reflected: “While we were not expecting any material changes [in the Budget], the [revised] IR35 legislation is still a widespread issue for many companies that want to attract and engage a flexible workforce without the risk of non-compliance, and for genuine contractors that are being forced to contract via umbrella companies due to blanket ban policies.”

Overseeing teams who place freelance consultants is Mr Lowdell.

He confirmed: “While the chancellor’s focus on embracing innovation, boosting business investment and driving growth is promising, I was very disappointed that there appears to be no further review of the IR35 off payroll rules.”

'Expand the cash basis accounting scheme'

Tax proposals that were announced at Spring Budget include a consultation to "expand the cash basis accounting scheme" – a simplified way that 4million sole traders settle up with HMRC.

At chapter 4.92 of the Red Book, the chancellor adds that a “systematic review of tax guidance and forms for small businesses” will be carried out.

While the review’s aim won’t have any critics (to ensure guidance is “clear, simple and easy to find” online), its timetable will – some “24 months,” so two years, until completion.

'Budget 2023 doesn't do much for the self-employed'

“Compared to recent Budgets, today’s was a lot less dramatic,” said Qdos’s Ms Slowey. “But whichever way you look at it, it doesn’t do much for self-employed workers [right now].”

That’s why IPSE believes it might be general economy measures, like Mr Hunt’s move yesterday to freeze fuel duty for 12 months, that might help sole traders more than any of his ‘targeted’ measures.

“The lack of focused support for those [in business who are] struggling to make ends meet is alarming,” warns IWORK chief executive Julia Kermode.

'Quick-win of trading allowance boost overlooked'

“Increasing the minimum trading allowance would have been a quick-win. Tax on miscellaneous income starts at just £1000, which is a ridiculously low threshold reached quickly by anyone selling skills or trading goods.

“With millions of people starting side-hustles while juggling permanent work, raising this threshold wouldn’t just help those most in need, it would provide a much-needed boost to the economy and encourage entrepreneurship.”

But measures the chancellor did announce, such as an expansion of R&D Tax Credits and the introduction of full capital expensing, are “far less relevant for freelancers and small businesses,” regrets FreeAgent’s Ms Coltman.

'Pretty bleak overall for freelancers'

Sounding despondent, the chief accountant told FreelanceUK: “Add to this the fact that there is no news on prospective tax cuts for the self-employed and no developments over what is happening…with IR35, and you get a pretty bleak overall picture.

“It’s possible we may see more specific policy details emerging in the months ahead, but right now it seems that freelancers and small business owners may have to wait until the Autumn Statement later this year to see if they will receive any extra support.”