Getting people back to work

Before the lockdowns there were some 5 million self employed people in this country. Most of them will continue as self employed but never take on a first employee and start the progress of building a bigger business. They are very valuable anyway, offering goods and services in flexible and attractive ways. They are a crucial part of the UK economy.

It is now an urgent task to tackle the unemployment the virus has already created and the possible job losses that could follow as the furlough scheme is wound down. Today I would like your help, by asking what changes to law, taxes and regulations should the government make to persuade more of the self employed to take on that first member of staff or that first apprentice to grow their business and to help bring down unemployment?

Some self employed I know used to run small businesses, but gave up on them and returned to working on their own for themselves. Going over the VAT threshold caused a lot of administration and worry. Choosing the wrong employee could land them in difficulties, without the resources a large company has to manage the odd difficult staff member. Conscious of the many duties of employers, they decided they would rather spend all their energy on serving clients and customers themselves, and limit their business size to their own work rate.

I have taken up the cause of the self employed in various ways. I have asked for the end of the threat to change IR35 and prevent some people from being self employed. I was one of those who asked for a self employed version of the furlough scheme for those banned from working. I think the VAT threshold could be raised to help. I want the public sector to turn to small business and the self employed for some of their work where the flexibility and price are helpful. So often public sector contracts are too large for small business, and the procurement process is biased in favour of the large companies.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

204 Comments

  1. Mick
    Posted June 24, 2020 at 5:30 am | Permalink

    Yesterday the PM was asked a question about vat & national insurance and replied that the mp should wait till the chancellor as spoken, would be a great help if they were reduced , off topic
    https://www.express.co.uk/news/uk/1300091/brexit-latest-news-SNP-labour-nicola-sturgeon-sir-keir-starmer-transition-period-boris
    Do these muppets takes us for idiots all they along with the libdims is to get a extension so they can find some way of overturning the historic vote which happen 4 years as of yesterday

  2. Bob Dixon
    Posted June 24, 2020 at 5:41 am | Permalink

    It takes 3 to 5 years to get a new business to reach critical mass. Gordon Brown introduced a nil rate of 10k corporation tax.

    • Lifelogic
      Posted June 24, 2020 at 6:30 am | Permalink

      Why not a nil rate far higher than £10k. Have it so you only pay taxes when you draw from the business (as dividend or wages or capital gains). If you leave the money in to grow the business and employ more people why deter this with high CT taxes? That way you grow the tax base rather than suffocating it. Do you want a real tree or a bonsai one constantly trimmed by the state to constrain, maim and prevent it growing? Surely the former?

      • Posted June 24, 2020 at 8:00 am | Permalink

        Excellent analogy. Of course the other major stumbling block to small businesses establishing and thriving is the fact that businesses like Boots (reported this morning) who have been trading throughout the lockdown, still refuse to pay their rent.
        Landlords like me use the income from big shops to ensure that I can make available attractive, energy efficient small shops for startup and small businesses at very affordable rents.
        The Government has said that (Greedy landlords) not having any income for half a year is acceptable. I still pay the insurance, service charges Etc which are all included in the rent invoices, which are not paid. The Corporations are threatening us with closure unless we write off these unpaid rents altogether. Had the Government not shredded our contracts with our tenants, we would not be in this situation. We need a solution and fast. I am not speaking of a couple of Grand, but hundreds of thousands. Impossible to carry.

      • piglet
        Posted June 24, 2020 at 1:13 pm | Permalink

        Excellent analogy.

      • Sir Joe Soap
        Posted June 24, 2020 at 2:07 pm | Permalink

        Indeed.
        Any growing business needs working capital, much of which goes on inventory, machines, etc. So during that time when your profits of £100k are going into funding inventory, and you have no wages, you also pay £19k ish Corp Tax. From nowhere! And it never comes back until you liquidate the company or borrow against it.
        Crazy!
        Write down all capital and inventory 100% at year end for the first 5 years. Or CT holiday.

        • Edward2
          Posted June 24, 2020 at 5:14 pm | Permalink

          I agree.
          In my decades in manufacturing industry it was a pain to pay corporation tax on paper profits when we wanted to retain money in the company for the future.
          To create expansion, more machinery more jobs.

  3. davews
    Posted June 24, 2020 at 6:02 am | Permalink

    Many self employed are almost by definition single man businesses. When before retirement I ran my own TV repair business there was never any thought about taking on staff, it was me by myself working from home (and hence minimum overheads). Some small businesses do need employees but many do not and you should not assume this.

  4. Posted June 24, 2020 at 6:04 am | Permalink

    Well noticed! In our local shop, which has done really well out of the covid crisis, the owner is a good, hard working man. He has had several other people to work in the shop so he can take some days off to build up business on his other shop, miles away. He has faced endless problems with the staff, some, certainly not all, his own fault.
    It works both ways – the employer suffers, but so do the employees and potential employees too. If the owner knows that if he hires the wrong person, he is in deep trouble, he won’t bother.

    • a-tracy
      Posted June 24, 2020 at 9:45 am | Permalink

      “He has faced endless problems with the staff, some, certainly not all, his own fault.”

      How was it the shop owner’s “own fault” I’m intrigued?

  5. Ian @Barkham
    Posted June 24, 2020 at 6:05 am | Permalink

    The genuine self-employed are also to get more overbearing strife from the tax authorities. Not because they are involved in any avoidance systems, but because they are a soft touch when there is a need to get tough.

    While all the while the large corporations, that employ tax avoidance as a way of life are left well alone. Even though pro-rata their tax liability is less. The smaller you are the more the UK tax system punishes you.

    A left field illustration, some auto manufactures employed a system in their vehicles to defeat CO2 emission testing. While it defrauded the customer it also defrauded the UK tax authorities in that all their vehicles have been assed in a lower road tax bracket. The UK revenue turns a blind eye to tax fraud by large corporations. The citizen is supposed to be happy that they have to pay more due to make up the short fall.

    • Ian @Barkham
      Posted June 24, 2020 at 6:08 am | Permalink

      The real flaw with all these setups/systems is the defunct, clunky tax system that is from another age that is no longer fit for purpose.

      If everyone was treated equally we would all pay less tax.

      • Walt
        Posted June 24, 2020 at 8:47 am | Permalink

        Define equally. Should we all pay the same, e.g. like a bus fare? Or should we pay according to our means?

        • Ian@Barkham
          Posted June 24, 2020 at 6:09 pm | Permalink

          Roughly, with companies the bigger you are the less you pay proportionally relative to earnings. Yet they consume more of the infrastructure, and enjoy more of the benefits provided by others.

        • M Davis
          Posted June 24, 2020 at 6:37 pm | Permalink

          We should pay the same percentage!

        • Narrow Shoulders
          Posted June 24, 2020 at 6:44 pm | Permalink

          We should all pay the same flat percentage with no loopholes other than tapered CGT

        • Lifelogic
          Posted June 24, 2020 at 7:21 pm | Permalink

          We should all pay the same like a service charge for service received or maintenance on a block of flats. Indeed you might argue that people using private schools and private medical care should pay less, and this should be encouraged to reduce dependence on the state.

          Clearly an exception needs to be made for ill health and the likes but otherwise why not.

    • Narrow Shoulders
      Posted June 24, 2020 at 7:31 am | Permalink

      True, the state is a bully picking on the weaker kids for their lunch money.

  6. Posted June 24, 2020 at 6:07 am | Permalink

    1. The maternity/paternity burden is huge for a small business.
    2. The Govt. made concessions to small business to enable them to purchase their own shops/places of manufacture, and put them into their pension – a good idea because they have equity against which to borrow in lean times and they keep their pension money out of the hands of the City) but without associated CGT concession for the landlord, the whole scheme was always doomed. British residents need to have parity re CGT with foreign residents.
    3. The burden of imposing business rates if you open a second site (on both sites even if individually they fall below the business rate threshold) is an impediment to expansion.
    4. The burden of 20% VAT on energy bills for small business not VAT registered is unacceptable. Obviously the green energy taxes are killing us all including small businesses.
    This in addition to all the other burdens you have listed.

    • Andy
      Posted June 24, 2020 at 7:24 am | Permalink

      There we go. Workers Rights is the top of your list. And you want to assault the rights of those who dare to have children. (Having children is just about the most natural thing in the world).

      Let me guess. You had children. You either had some sort of maternity provision or your husband’s salary covered it all anyway because that’s what happened in the 70s and 80s. And now you are retired – hence you are a significant drain on the state – but you still ‘never claimed a day in your whole life’ (except child benefit, pension etc). Appalling.

      • M Davis
        Posted June 24, 2020 at 6:40 pm | Permalink

        … (Having children is just about the most natural thing in the world). …

        And so is growing old, Andy!!

        • Fred H
          Posted June 26, 2020 at 9:49 pm | Permalink

          and so is youth thinking they know it all!

      • Narrow Shoulders
        Posted June 24, 2020 at 6:53 pm | Permalink

        The state pays maternity and paternity pay Andy.

        The employer has to find temporary cover for the absence. If the worker is good then any employer would of course hold their job for them but why should their position be held if they are not an asset?

        In the 70s husbands covered their family’s expenses. Then government decided that they could collect more taxes through equality. And now every family has less than they had before but needs two earners to pay for less. Progress?

        • a-tracy
          Posted June 25, 2020 at 9:38 pm | Permalink

          Narrow shoulders the state pays 92% of SMP, by far the biggest cost to employers with workers on Maternity leave is maternity leave holiday pay. You pay that in addition to the holiday pay you pay their replacement temporary labour so you have to fully cover that 28 days minimum.

          The benefits comparison for the 70’s couple to now are mainly to the husband who is now working 15-20 hours less per week than they used to average as the wife/partner picks up the hours. The working time directive massively decreased working hours and in order to buy a property or take holidays often the married female has to work unlike those that are married to the State partner who were all given an extra £1000 Universal Credit at the start of Covid19 but still can’t feed their own offspring!

      • Anonymous
        Posted June 24, 2020 at 7:01 pm | Permalink

        So the boss has to pay for when you’re not there.

        I can’t believe that you run a business, Andy.

      • Posted June 24, 2020 at 8:50 pm | Permalink

        Gee Andy I don’t know how you do it! You, John Major and Theresa May, none of you ever get anything right!
        If there are no businesses there are no workers – get it?
        I want our taxes to be so low that husbands can afford to support their families instead of both husbands and wives working for half a wage each! No point having children if you ‘warehouse’ them from 6 weeks old! It is traumatic for the mothers, cruel in fact, and damages the babies who have to ‘make up’ to anybody to get fed. They develop a lifelong inability to establish stable relationships having been promiscuous from birth.
        I have no children. My father was 100% disabled – Royal Navy War veteran (subs). He became so ill after the War that my mother died, of shock I think (when I was 12). I’m an only child. I provided for and cared for my father for 34 years until he died. No state contribution. No NHS. Just me and I worked full time too, from home fortunately, IT. I paid higher rate tax most of my life. I get the state pension next year, if I’m still alive! I will draw less than I paid in, even in nominal terms. I don’t use the NHS. I also have investments – commercial and residential property, which provide my income on which I will pay tax all my life.
        Now apologise, and stop assuming.

      • Mike Wilson
        Posted June 24, 2020 at 10:32 pm | Permalink

        Does the person running the business get statutory maternity pay or paternity pay. Thought not. Why not? Everyone knows everyone who runs a business is making a fortune. Workers’ RIGHTS!!!!! Give me some of them.

        I assume when you are old enough to receive the state pension, you won’t accept it because you don’t deserve it, you haven’t paid anything into it and you don’t want to be a drain on the state.

        I, on the other hand, have been paying the pensions of older people all my life so I don’t feel like a drain on the state now. Why should I!

      • NickC
        Posted June 25, 2020 at 8:17 am | Permalink

        There we go. Workers Privileges are the top of your list. As though these privileges don’t have to be paid for. By the customers. Who are the workers. Like the EU, you think shuffling other people’s money around is virtuous, when it is merely devious.

      • a-tracy
        Posted June 25, 2020 at 9:26 am | Permalink

        Andy most small enterprise owners that I know think that Statutory Sick Pay and Statutory Maternity Pay plus the holiday pay accrued during these breaks from work should be paid but paid out of a ring-fenced social fund directly by government as all other social funds are paid by the government and not by business.

        Here you go insulting retirees once again. The majority of these retirees have paid in to the National Insurance Fund and their employer has contributed national insurance payments to their state pension fund for 44 years and now more – you are appalling.

    • IanT
      Posted June 24, 2020 at 8:50 am | Permalink

      Very good points Lynn.

      I employed over 30 people directly and about 20 ‘contractors’ on an ad-hoc (as required) basis. We had two large rented premises where the overheads increased relentlessly year on year. I am now a decade into retirement but if starting over as a younger person, I would simply embrace the on-line world – and avoid as far as possible hiring any permanent staff or taking on commercial leases. I would try to build a team of ‘virtual’ staff (freelancers) and outsource everything I possibly could to third parties.

      The Government is also outsourcing of course – mostly Social Care – minimum wage, maternity rights, pensions etc – and it is laying this burden on the employer. All well and good if you are a large Corporate but complete nonsense for a small employer. I worked long hours in the office and then even more hours at home trying to keep up with Employment Law, H&S, Corp Tax & VAT. I wouldn’t willingly do it again.

      IanT

      PS We’ve been in lock-down for three months now and will stay in it for a while longer. ‘Lockdown Life’ for us (sat in the garden) is still very pleasant – but I thank the Gods that I’m now retired, as running any small business through this crisis would have been a complete nightmare. My heart felt sympathies go out to all of those trying to do so.

    • Al
      Posted June 24, 2020 at 11:20 am | Permalink

      Agreed.

      I would at the very least suggest cottage industry laws to lessen the regulatory burden on small businesses if they are under the VAT threshold, and a minimum wage for such set-ups linked to what the owners/directors are making.

      In the case of a two-man team working part-time and earning under minimum wage because the organisation is a start-up, expecting them to pay £10 an hour, offer a pension, cover maternity pay, manage HR, and the accounting bill, to get someone to help for a couple of hours at weekends is ridiculous. The overhead is many times what the assistant is making. If you wonder where entry level jobs have gone, this would be your answer.

      We’ve had people help with local community groups who have had to volunteer because if they even got a £20 voucher or a bottle of wine to say thanks, that would be considered ‘deemed employment’. It also means they can’t get references (legal concerns stop some smaller nps handing them out), so it doesn’t help them get jobs.

  7. Mark B
    Posted June 24, 2020 at 6:11 am | Permalink

    Good morning.

    Napoleon once derided the UK as a nation of shopkeepers. It was a sound observation and, over time, one that has hardly changed. We are a nation of SME’s but will our government listen to them ? To that, I say no !

    Generally the cry goes up for less regulation. But there is one thing, a law, that I and others have pointed to as the Great Inhibitor of Growth, and that is the Climate Change Act. As we touched on recently, an economy that wishes to thrive must have not only cheap and reliable energy, but must have the shackles of pointless regulation(s) removed.

    Less is more !

    • Ian Wragg
      Posted June 24, 2020 at 9:30 am | Permalink

      The government dislikes self employed because it has no control, hence the IR35. Governments are greedy for our money so they love PAYE.
      They would also like a cashless society so they could observe all transactions. Big brother is their desired outcome.
      What’s the betting the emergency legislation doesn’t get repealed.

      • Lifelogic
        Posted June 24, 2020 at 7:24 pm | Permalink

        +1

      • Alan Jutson
        Posted June 24, 2020 at 7:45 pm | Permalink

        very true Ian.

      • Posted June 24, 2020 at 8:53 pm | Permalink

        The emergency legislation MUST be repealed ASAP. Maybe Sir John can confirm?

      • NickC
        Posted June 25, 2020 at 8:26 am | Permalink

        Ian W, True – IR35 should be scrapped because it is arbitrary, partial and inefficient.

        NIcs is a mess any way and needs to be revised: employers’ NIcs is an employment tax; employees’ NIcs is income tax and should be combined with it. Then a simple rule such as no more dividends than salary, allows a small tax break to entrepreneurs, and is simple, fair, and efficient.

    • Lifelogic
      Posted June 24, 2020 at 7:24 pm | Permalink

      +1

  8. Lifelogic
    Posted June 24, 2020 at 6:23 am | Permalink

    Easy hire and fire is needed with standard pay offs for all employment. It would help employees too. The only really valuable protection for employees is lots of available jobs. Employment laws mean fewer jobs. Who wants to work alongside people who are not up to the job or just passing the time swinging the lead?

    Employment laws are a huge deterrent to taking people on. Who also wants to push useless employees onto their customers damaging their reputation?

    The VAT threshold encourages one person operations (as going to two tends to mean the hassle and costs of both VAT registration, PAYE admin and potential Large employee claims so just not worth it). At least not if you sell to people who cannot recover VAT. This is hugely damaging as these people could be learning on the job and are often not doing so.

    I want to see more people actually doing useful things and few HR consultants, lawyers, accountants, bureaucrats and all the other largely parasitic jobs around.

    Why not (instead of soft loans for usually rather worthless degrees in rather worthless subjects) have some soft up to £50k loans to suitable people to start up a business or take someone on and train them up?

    • a-tracy
      Posted June 24, 2020 at 10:13 am | Permalink

      It is easy to hire.

      • Lifelogic
        Posted June 24, 2020 at 7:25 pm | Permalink

        but often a mistake!

      • Mike Wilson
        Posted June 24, 2020 at 10:39 pm | Permalink

        You have no idea. Thank heaven for probation periods. On the rare occasions I have hired I have always been surprised at how many nutters there are about. And how needy employees are. You worry like mad when you have to fire a useless one. Will they find another mug to give them a job. What if they need a reference. Lots of people think all they need to do, as an employee, is turn up each day and collect their wages. Stuff workers’ rights.

        • a-tracy
          Posted June 25, 2020 at 9:29 pm | Permalink

          I’ve employed hundreds of people Mike, it’s easy to hire, it’s not easy to hire well and it’s not easy to fire.

          • Fred H
            Posted June 26, 2020 at 9:48 pm | Permalink

            and thats in the UK – – now do it in France, Belgium, Germany!

    • Sir Joe Soap
      Posted June 24, 2020 at 1:57 pm | Permalink

      Last para the Irish do, but only to people with a plan, normally STEM graduates. You then need to get them close to larger corporate customers, which they also do. Look at Enterprise Ireland and the Tech sector there. All on the back of low Corporation tax and a plan for employment like this.

  9. Adam
    Posted June 24, 2020 at 6:27 am | Permalink

    The self-employed person (S) can employ the unemployed (U) simply by the U person becoming self-employed too. Then S can assign as much work as is appropriate to both of their needs and capacity. Similarly the U person is flexibly available to perform work for others. Longer term mutual contracts can follow as business and performance develop.

    • a-tracy
      Posted June 24, 2020 at 10:20 am | Permalink

      There are, quite rightly, downsides of engaging a colleague as self-employed, they can substitute their hours of work and hire someone else (if you stop them doing this then they aren’t self-employed), they shouldn’t be in your uniform, they need to work for other businesses too and not be a primary contractor for you otherwise they get ‘worker’ status and you are eligible for extra costs. They can decide what work they do and when, where or how to do it. What stops them from approaching your clients for direct work if they provide their own equipment? They still have protection for their health and safety and, in some cases, protection against discrimination. They need to agree on a fixed price for their work – it doesn’t depend on how long the job takes to finish so no paying by the hour.

      Get it wrong and individuals and their employers may have to pay unpaid tax and penalties, or lose entitlement to benefits, if their employment status is wrong.

      • Adam
        Posted June 25, 2020 at 6:35 pm | Permalink

        Individuals each assess to decide what is mutually beneficial. Some agree.

    • Sir Joe Soap
      Posted June 24, 2020 at 1:54 pm | Permalink

      True only if U has other work too. Then not usually a long term plan as U is usually also working for wife/hubby or someone else close, and is more looking for cash to make up than long term career.

    • Mike Wilson
      Posted June 24, 2020 at 10:41 pm | Permalink

      That is nonsense. There are lots of rules about whether you are self employed or employed. Like do you work as directed by someone else and do you have to out defective work right at your own expense and can you lose money as well as make it etc.

  10. Nigl
    Posted June 24, 2020 at 6:34 am | Permalink

    I think you have covered this before albeit this time answered much of your own question. Politicians on the subject always assume all businesses are scalable and they are not.

    Many of those you talk about are lifestyle businesses, another word that never seems to be acknowledged. The reward is directly related to the effort and needs of the owner. Please think about what you are saying. With on costs one employee needs £50k of turnover, let’s say I am happy on £50/75k how am I going to generate an extra £1k a week etc and do my own work let alone manage, train,QA the work etc? I am not. Reduce my costs/make my life easier, thanks but never will an additional person come on as establishment.

    Create a pool of workers available for me to draw on a subbie basis.

    If I am ambitious, my business is scalable, cost is key. Available rent free, say for the first 2/3 years units are invaluable. Secondly suspend all employee legislation (not H and S) including maternity/paternity, pensions and the rope around our necks, the business equivalent of Covid, the minimum wage, when will it strike next until the number if employees reaches 10 because at this level specialist support HR support starts to be affordable, say for the first three years.

    Of course the real answer is to look at other dynamic economies, especially the US. I suspect the answer is fewer safety nets and I know a lot less risk averse. Americans have an umpteen times more appetite for Business Angel activity than we do. You won’t like the answers.

    The jobs for life public sector, welfare state, over regulation and political correctness in this country created or allowed by you and your colleagues for as long as I can remember are the structural issues that need to be resolved and despite all the BS they are getting worse.

    I applaud your efforts and wish them well but the public sector with all the associated costs and inefficiencies are dragging us back. Worryingly even a so called Tory government is happy for that to continue.

    • Ben ES
      Posted June 24, 2020 at 10:03 am | Permalink

      Exactly. Very small business is very risky. In a way, more so for that first employee, because in lean times they will be the first to have hours reduced or be laid off.

      Why not be upfront about this and let those employees share the risk by offering an independent worker status, somewhere between employed and self employed. Availlable only for very small business or as a percentage or fixed amount limit to stop the big firms taking the mick.

      Also ideal for students, semi retited, etc

      • Mike Wilson
        Posted June 24, 2020 at 10:43 pm | Permalink

        Against HMRC rules on self employment.

    • Sir Joe Soap
      Posted June 24, 2020 at 1:50 pm | Permalink

      With all the help in the world for small business, when the first employee has the choice of £50k a year/ 6 weeks paid holiday, pension etc. as a Police Diversity Liason Advisor or some such or £25K a year as an Administrator in your new business, guess which one they take.

      • Andy Large
        Posted June 25, 2020 at 2:36 pm | Permalink

        +1 .

  11. jerry
    Posted June 24, 2020 at 6:42 am | Permalink

    To expand many self employed need low cost, flexible, light industrial class units or office space (and no shared space is not the answer, it wasn’t before CV19 and it certainly is not now!), it is one thing to run a small business from the garage or spare bedroom when employing yourself and the unpaid help of the spouse/family but another when taking on that first employee. So we need sensible levels of UBR, there needs to be a rethink regarding VAT, raising the threshold is but one aspect of VAT that often disadvantages small businesses, not just the self employed, for example any HMRC registered business should be exempt from VAT on B2B purchases, not just those with a VAT No.

    But more generally, over the last 10+ years many people have become SE not necessarily because they wanted to work for themselves but because that is what some quite large company business models require, zero front-line employees, zero commitment to how many hours any single SE contractor might be given etc. Others have become SE, offering a service, what ever that might be, simply because they could not find a ‘traditional’ 9-5 8hrs per day job, and were getting pressures by the DWP and their agents to get off UB/UC. My point, many perhaps do not actually want to be SE, and certainly do not want to take on an employee!

    For there to be more permanent 9-5 8hrs job here in the UK we need to make more here in the UK, why buy widgets from Germany or China when they can be made here, and as Trump realised, not only are most people patriotic but they are actually willing to spend a little more on Made in the USA products – hence MAGA….

    • jerry
      Posted June 24, 2020 at 7:11 am | Permalink

      How about bringing back the much lower “Light Goods” VED class for HMRC registered businesses, better still simply scrap VED entirely and place a slightly higher tax on road fuels? Many self employed need both their family car(s) and a work van/truck.

    • Sir Joe Soap
      Posted June 24, 2020 at 1:46 pm | Permalink

      The units are there but the Business Rates burden is stupid. It encourages online/importing and discourages making/employing.

    • dixie
      Posted June 24, 2020 at 6:00 pm | Permalink

      Agree.

      Unfortunately local authorities are encouraging redevelopment of distributed, low cost light industrial/workshop premises into residential dormitories. they build a few new “business parks” but they are centralised and far more expensive to rent.

  12. Everhopeful
    Posted June 24, 2020 at 6:44 am | Permalink

    Govts “prime the pump” with help and encouragement…(like buy to let) and then destroy whatever business with expensive regs, paving the way for large concerns ( housing assocs) to take over.
    Exactly what happened to my self employment.
    Initially I was answerable only to my Institute and then all was made impossible by creeping regs.

  13. Posted June 24, 2020 at 6:44 am | Permalink

    Good luck JR with getting some rational changes to VAT – The whole tax system is unfit for purpose and will only add to the problems faced by all, not just the small business innovators we need so badly.

    If the chancellor mishandles changes to the tax system for example by increasing rates, then our recovery will be questionable at best. This will be a test of how Conservative he, and our government are.

    The Lock-down was always a gamble, the longer it goes on the more of our society will be destroyed…. But should another lock-down be imposed on us, then we might as well pull the plug, because it would be most unlikely that the UK would survive.
    What concerns me and many others about this lock-down, is how the rules can be waved for certain left wing protestors – authorities give then a green flag to do whatever they will, and yet any people who are not left wing that try to protest are abused and treated as criminals.

    The Lock-down has brought out those in authority that want to impose their will, and change the way we live forever — This is far from acceptable in an alleged democracy, and the government need to stamp it out.
    Justice and the rule of law are important, but should never be used against those that support it.

    • piglet
      Posted June 24, 2020 at 1:18 pm | Permalink

      Excellent comment.

  14. Nigl
    Posted June 24, 2020 at 6:52 am | Permalink

    Ps. You should look at the success of the Indian communities. Massive ambition, hard work, commitment to learning by their young people, good family values, tremendous networks and support systems.

    Really good lessons for all communities to learn. Regrettably not acceptable to some.

    • Mark B
      Posted June 24, 2020 at 11:12 am | Permalink

      We had those. Then the government decided to break up those communities and put them in high rise flats.

      • Fred H
        Posted June 26, 2020 at 9:46 pm | Permalink

        High rise due to insufficient land to house the growing population – intrinsic and immigrant.

  15. peter
    Posted June 24, 2020 at 6:53 am | Permalink

    As I have always said VAT is a bureaucrat’s dream, an EU delight! It has many, many stages but ultimately there is only one real payment point. It should be scrapped now and replaced with a sales tax. This would make it transparent to all and not affect overall tax take.
    The current VAT limits are only of benefit to small traders working for non registered customers and encourage fraud. If we wish to give the small self employed a competitive advantage there must be a more straightforward way, and we could let them get quite a bit bigger without penalty.

    • Fred H
      Posted June 24, 2020 at 8:52 am | Permalink

      agreed.

    • Northern Monkey
      Posted June 24, 2020 at 10:52 am | Permalink

      Actually a sales tax would significantly raise tax revenues, even if rates were pegged to VAT rates, as there would be an end to the off-shoring of supply in order to ensure revenues are recognised in low tax authorities.

      The downside to this, however, would be that fraudulent non-payment of sales tax would have a significantly greater impact that non-payment of VAT, which is collected piecemeal wherever value is added during the supply chain, such as in manufacturing or assembly plants.

    • Caterpillar
      Posted June 24, 2020 at 7:08 pm | Permalink

      I disagree with this. VAT is preferable but threshold for registration should be reduced! There should be only one rate to maximise simplicity, but come on its a VAT return its not going to Mars.

      Sales taxes are susceptible to mass avoidance (only collected at end of suply) and of course arguments about whether a given purchase is final consumption.

  16. Mike Wilson
    Posted June 24, 2020 at 6:55 am | Permalink

    My first question of any tradesman is ‘are you VAT registered?’ If they say ‘yes’ I discount them. So, there’s a place to start. Raise the threshold to £1 million so only people in business pay VAT – as they can reclaim or offset it.

    Taking on just one employee and being faced with statutory sick pay and statutory maternity pay – what a nightmare. I’ve done it and would never do it again. And workplace pensions. And health and safety. And waiting to get paid by clients while employees simply demand their pay on the nose every month. And running PAYE.

    Wow! Who would be a small employer?! Different for big companies with their own accounts and HR people.

    • Jim Whitehead
      Posted June 24, 2020 at 7:11 am | Permalink

      Mike Wilson, you’ve covered it all, and with the same conclusion that I came to and as did several others I know. I reduced my employees to one because of the hassle. The disincentives are legion at present..

    • Sharon Jagger
      Posted June 24, 2020 at 7:34 am | Permalink

      Mike

      I was just talking to my husband about why someone we know, has worked for 30 odd years being a landscape gardener and has no employees. This friend has always had two people working with him, but they too are self employed.

      My husband relied with exactly the same reply as you describe in the second paragraph of your comment.

    • Nigl
      Posted June 24, 2020 at 7:39 am | Permalink

      Spot on re employees. This is obviously unpalatable to politicians because they keep coming back to it. If they listened and learned maybe something would change.

      History tells me however they ignore the unpalatable, the difficult, and non headline grabbing.

    • Fred H
      Posted June 24, 2020 at 8:55 am | Permalink

      Introduce a legal stipulation that unpaid after 60 days invoiced debt incurs an immediate extra penalty 10% charge payable within 1 week.
      That will sort out who will pay the debt and who will go bust!

    • Ben ES
      Posted June 24, 2020 at 11:31 am | Permalink

      Flat rate VAT removes most of the nonsense. It is pretty much just a sales tax. My husband and wife business produces two good incomes from the turnover limit of 230K, but would not allow taking someone on. For a service business with lower overheads, in the provinces, 230K could support 3 or 4.

      1) Raise the turnover limit.
      2) Remove the crazy restriction that you can join if you’re under 150K, but then stay in until 230K. This gives an expanding business just one chance to join. Just set a threshold, like with VAT itself.
      3) Publisize it better. I’ve met plenty of people put off from expanding by the dreaded VAT registration who would probably have been fine with flat rate.
      4) Take the turnover straight from corporation tax return and remove the VAT return and its seperate accounting period entirely.

      • NickC
        Posted June 25, 2020 at 8:40 am | Permalink

        Ben S, My industrial customers would not deal with me unless I was VAT registered. I did all my own PAYE and VAT returns (end of year accounts were handled by the Accountants) and never had problems. I made use of both as a form of financial control of my Ltd co (sole employee: me).

    • Lifelogic
      Posted June 24, 2020 at 12:40 pm | Permalink

      Exactly right on the VAT point. If VAT were 8% or even 10% not too bad but at 20% it is absurd. I often consider what the “loop” tax is – how much tax in the loop from you as buyer back to the other worker’s pocket.

      Pay 1.20 including VAT, they get 1.00 then they pay about 45% of this in tax and NI (both) so you pay £1.20 worker gets 55 pence government gets 65%. It is a huge incentive to DIY, amateurism and inefficiency. It damages productivity and jobs hugely.

      • Lifelogic
        Posted June 24, 2020 at 1:19 pm | Permalink

        65 pence not 65%

  17. Lifelogic
    Posted June 24, 2020 at 6:57 am | Permalink

    Certainly an end to the idiotic threat of end of IR35 and the making tax digital is an expensive hassle to.

    The other day I rang the HRMC stamp duty help line (for once they did answer quite quickly and did not cut me off). This to find out how much stamp duty SDLT was due on buying a plot with one house on it but with planning for three new houses. If bought personally or by a company and/or if bought before or after demolition or after starting the three builds. I could be even get a straight answer to this – so absurd and idiotically complex and contrived is the current tax system.

    If they do not know how are we expected to? Do they know how much this tax complexity costs the economy and how many pointless & parasitic jobs it creates?

    • Martin in Cardiff
      Posted June 24, 2020 at 7:16 am | Permalink

      You apparently expect Parliament to be able to legislate for every situation which might arise in a complex world.

      That is rather telling, I think.

      But if you research the definition of SDLT then I think that the answers to your questions are contained in that.

    • Nigl
      Posted June 24, 2020 at 7:33 am | Permalink

      Yes. If you were running a complex business these calls word inform your MI and when they reached a number to gave serious cost/customer retention implications, you would analyse and then resolve.

      HMGs institutions do not have cost or customer care issues as a driver so no one can be bothered.

    • Sir Joe Soap
      Posted June 24, 2020 at 1:42 pm | Permalink

      Skinflint to call HMRC!
      Pay for a proper tax specialist! :-/

  18. Roy Grainger
    Posted June 24, 2020 at 6:58 am | Permalink

    People setting themselves up as personal service companies and paying themselves via dividends have been avoiding income tax and (especially) National Insurance for years – this avoidance measure has even been promoted by employers like the BBC to save on employers National Insurance payments – the “threat” to change IR35 should become a reality to close this loophole. In general overall taxation levels should be the same for the employed and self-employed. One obvious step would be to finally combine income tax and National Insurance into a single income tax and impose it on all earners – including people who stay in employment beyond pension age.

    • jerry
      Posted June 24, 2020 at 8:45 am | Permalink

      @Roy Grainger; “In general overall taxation levels should be the same for the employed and self-employed.”

      There is some logic in that, but would the govt want to travel that road, would many on PAYE, after all if you tax both the employed and self-employed the same then the benefits system will need to be equal – the self-employed may well pay less tax but they’re not getting treated the same by the govt, and to do so might cost more than the extra taxes raised meaning everyone’s taxes need to rise!

      • Mike Wilson
        Posted June 24, 2020 at 9:14 pm | Permalink

        Yes indeed. Just imagine being self employed and getting statutory sick pay! Or having no work on and being able to get Jobseeker’s Allowance! Wow!

    • a-tracy
      Posted June 24, 2020 at 9:04 am | Permalink

      Don’t these personal service companies pay corporation tax on their profits before drawing them as dividends Roy? Dividend taxes were put up by Hammond and you can’t draw dividends from untaxed company earnings as far as I know.

      • Mike Wilson
        Posted June 24, 2020 at 9:18 pm | Permalink

        Spot on. I’ve never seen the attraction of paying corporation tax and then paying tax on dividends. If there is a tax advantage it must be minimal.

        • Edward2
          Posted June 25, 2020 at 1:30 pm | Permalink

          You are correct Mike.
          The difference currently is small as recent budgets have acted to close the gap.

    • Northern Monkey
      Posted June 24, 2020 at 11:08 am | Permalink

      The self-employed do not receive all of the benefits of the employed (such as paid holiday or sick pay).

      It does not seem equitable to tax them as though they benefit equally.

      Likewise, the discussion around IR35 is more nuanced than you imply – it can be used by large firms to effectively remove employees and their associated costs from their ledgers, thus simply avoiding their tax obligations.

      IR35 can also, however, he used by small companies setting out which cannot afford to pay market rates for their owner-operators, such as a plumber setting up on his own, which otherwise would not be viable financially, but which have the potential to grow into normal companies.

      A fairer solution might be to tax company directors, which is what IR35 turns small business owners into, in exactly the same way as employees. I suspect, however, that the great and the good would not be willing to sour their current sweet deal.

      • Caterpillar
        Posted June 24, 2020 at 7:25 pm | Permalink

        I think your first paragraph is not fully balanced. A self-employed individual should be charging sufficiently to effectively cover his/her own holiday pay. He/she has the freedom to not do this and compete on price, or to not compete on price but work those days for extra imcome. In terms of sick pay risk is diversified via insurance rather than a larger company bearing the risk itself (again some self-employed cut this cost, i.e. a choice).

      • a-tracy
        Posted June 24, 2020 at 10:00 pm | Permalink

        Hold on Northern Monkey the tax man doesn’t pay holiday pay OR sick pay/sick holiday pay the business owner does as the self employed business owner pays themselves this pay and should incorporate it in their quoted rate.

    • Al
      Posted June 24, 2020 at 11:26 am | Permalink

      Combining Income tax and National Insurance, (and the employer’s contribution and corporation tax) would be an extremely good step forward, cutting costs and bureacracy, and simplifying the pensions system.

      However I suspect it would not be accompanied by the reduction in the number of civil servants, and therefore government expenses, that you would expect.

    • Lifelogic
      Posted June 24, 2020 at 12:24 pm | Permalink

      Well if they had sensible, simple and neutral tax laws, at sensible tax rates and with sensible employment laws people would not need to jump through these hoops as there would be nothing gained by doing so. The hoop jumping advisors could get a real job instead too.

      But if you want to compete you have to minimise your taxes and potential employment liabilities (just as you must minimise your other costs and overheads). If you do not then you go bust, lose your customers (or get taken) over in the end.

    • Lifelogic
      Posted June 24, 2020 at 12:29 pm | Permalink

      Not likely to combine Income Tax up to 20%-45%, NI (employers and employees circa 25% combined) as then people would realise how hugely overtaxed we are. This for so little of real value in return as public services.

      • Posted June 24, 2020 at 9:19 pm | Permalink

        Quite so. Then add in VAT, death duties, stamp duty, congestion charge, green taxes etc etc and you find the Marginal taxes in the U.K. are over 90%.
        No wonder half of us are on anti-depressants!

        • Mike Wilson
          Posted June 25, 2020 at 1:11 pm | Permalink

          You missed council tax, the nearly 70% of the pump price that is fuel duty, car tax, tax on savings interest, parking charges, airport taxes and a load of others.

      • a-tracy
        Posted June 25, 2020 at 8:29 am | Permalink

        Lifelogic 25.8% National insurance combined over the lower earnings level.
        Plus 8% Nest combined.
        And Andy thinks all pensioners don’t deserve their State Pension that was put off for 6 years for women. The majority of working people will be paying in for fifty years! Then those that don’t pay anything in at all over the years get a similar amount of pension credits.

    • Sir Joe Soap
      Posted June 24, 2020 at 1:39 pm | Permalink

      The idea is supposed to be that folk who invest their own cash in businesses deserve to benefit from the one-sided risk they take (make money you receive dividends and still pay income tax, lose money you go bust but the government won’t pay you any of the tax back when on the dole).

      As an employee your money is safely locked up in ISAs and when your company goes bust you still have that plus notice pay plus redundancy money tax free plus dole money. In the public sector of course even this risk is absent.

      Tell you what, get employees to stump up a few years’ wages or remortgage the house to buy their employer’s shares or for public sector workers, a bond which gets liquidated if they get ill or quit the job, and I’ll go with your idea.

      The PSC is a bit irrelevant – the extra cash would mainly go into pensions which then get caned for tax on dividends or withdraswals later. Remove NI if you like and replace with a requirement to fund health insurance etc. either through the PSC/employer or personally for self employed.

  19. Glenn Vaughan
    Posted June 24, 2020 at 7:06 am | Permalink

    After the General Election result that produced a comfortable Tory majority I hoped that a Conservative government would set out a plan to reduce taxation. I wanted an announcement that included the dual goals of reducing the basic rate of income tax to 15% and the raising of personal allowances to £20k over the course of a parliament.

    What we got was tinkering with national insurance contributions (thanks to the influence of the idiotic Cummings) which a significant proportion of the population doesn’t pay and no raising of the personal allowance. So much for the Tory claim to be a party of low taxes.

    • Martin in Cardiff
      Posted June 24, 2020 at 7:08 pm | Permalink

      Why don’t you vote for a party with a proper, detailed manifesto, which includes things that you want instead?

      • Edward2
        Posted June 25, 2020 at 1:33 pm | Permalink

        Is there an opposition party that promises lower taxes?
        In the last election Labour Greens and Lib Dems all promised higher taxes.
        It rather limits your choices.

      • Fred H
        Posted June 25, 2020 at 9:38 pm | Permalink

        show us a manifesto that was carried out.

  20. Alan Jutson
    Posted June 24, 2020 at 7:07 am | Permalink

    The problem with self employment is that work loading/volume is not guaranteed.

    Hence you need a flexible enough scheme that will allow you to simply contract work out when you are busy, but not to have any penalties or obligations if work slows.

    Hence the use of sub contractors is the normal method in busy times., as I have said before on here, the old 714 scheme worked well years ago, it was a paperwork system then, but should be even easier now everything is digital.

    All a main contractor needed was the HMRC registration number of the subby, which he recorded when payments were made via an invoice.
    The Subby recorded likewise the main contractors details and payments received.

    The biggest problem with expansion is not the first (who typically works with or alongside the original person) but expansion to the third or fourth, when the original worker then becomes far less productive themselves, and works to feed the others with work, but because their own productivity is lost, ends up not making any more money than when they were on their own.

  21. Posted June 24, 2020 at 7:16 am | Permalink

    (1) Abolish GDPR (2) Introduce a blanket exemption from the Equality Act for all employers with 10 or fewer employees. Res ipsa loquitur.

  22. formula57
    Posted June 24, 2020 at 7:22 am | Permalink

    A reason small traders may not want “the public sector to turn to small business and the self employed for some of their work” is, I understand, that Local Authorities are typically very slow payers indeed.

    One trader suggested to me it was a technique to identify robust businesses partners: if they could cope with long delayed cash flows, perhaps they were more reliable.

  23. Narrow Shoulders
    Posted June 24, 2020 at 7:28 am | Permalink

    No business with fewer than 10 people should need a personnel department other than to collect employee details and to ensure payroll taxes are paid.

    Remove businesses with 9 employees or fewer from employee legislation other than basic health and safety. Any employer who discriminates is generally hurting themselves by missing out on good talent so let them learn the hard way through competition.

    Encourage cash payments by removing them from tax (VAT, corporation tax) for businesses smaller than 10 employees, make this process legal. Help consumers as well as business.

    Create no fault terminations. Employees to be entitled to pay in lieu of notice but should be able to be terminated by the employer with no explanation, again for businesses of up to 10 employees.

    Public sector contracts – create a portal through which consortiums of small businesses can get together to bid for public sector work. This will drive competitive bids and open up the process to more organisations.

  24. Dave Andrews
    Posted June 24, 2020 at 7:37 am | Permalink

    I imagine there will be a huge number of people who have lost their livelihoods and investment in the businesses they have recently created.
    Even if they could fund a restart, why would they when the next government clampdown could smash it all to bits again?

  25. Andy
    Posted June 24, 2020 at 7:45 am | Permalink

    What can you do – or what will you do?

    I don’t doubt the Conservatives will go for workers rights. Treating employees properly is expensive – so those rights will go first, alongside protecting the environment. But people in precarious employment are not valuable to the economy and who really wants to harm the planet? So what should you do? Easy wins first:

    – Scrap Sunday trading laws
    – Ease planning laws, make it easier for shop space to be used as cafes etc and vice versa
    – Legalise e-scooters and safe cycling on footpaths and pavements
    – Tackle parking cowboys
    – Interest free loans to buy things like electric cars, solar panels etc
    – Scrap Brexit – cost £200bn already and 400m extra forms a year, plus 50k bureaucrats
    – Free childcare, this is what stops so many working
    – State pensions only paid in return for work. Do nothing, get nothing.
    – Simplify taxes. How silly is the self assessment form?

    Finally, if you want to boost the economy give ever person in the country £2000. Not in cash. On a card with a 6 month expire date. You have spend it within 6 months or you lose it. And it can only be spent with small companies – independent retailers, small cafes etc. Fund it by having a windfall tax on billionaires. Easy.

    • Posted June 24, 2020 at 9:24 pm | Permalink

      Are you on the stage? 😂😂 if not you should be!

    • NickC
      Posted June 25, 2020 at 8:47 am | Permalink

      Andy says: “Brexit – cost £200bn already and 400m extra forms a year, plus 50k bureaucrats” – none of which is true. You need evidence. You don’t provide any because you can’t.

  26. Anonymous
    Posted June 24, 2020 at 7:47 am | Permalink

    Tractors.

    We may as well get building tractors now.

    Let the BBC report your stats – after the daily Two Minutes of Hate.

    The Communists have won.

    • APL
      Posted June 25, 2020 at 3:29 pm | Permalink

      Anonymous: “The Communists have won.”

      With the Tory party opposing them. It was a SLAM DUNK!

      We need an alternative vehicle to the Tory Quisling party.

  27. Richard1
    Posted June 24, 2020 at 7:50 am | Permalink

    Marvellously illustrative contrast between the private and unionised-public sector mentalities. Private sector actors are tearing their hair out at restrictions. Such as gyms which should surely be allowed to open if pubs and restaurants are! Private schools are going to return in full in sept now they are not legally prevented from doing so.

    But what do we see from the teaching unions in the state sector? Moaning and disparagement of the govt and a long list of reasons why schools won’t be able to go back in sept. These people need to think of their professional duty to the children they are meant to be teaching.

  28. Aaron Shone
    Posted June 24, 2020 at 7:52 am | Permalink

    While the IR35 changes have impacted me personally, and my one man Business has basically been suspended while I work inside IR35 (Client insisted just as the whole COVID situation was starting and I could see the contract market about to tank), I can see a benefit that a small but expanding company could expand by hiring more contractors inside ir35 as no rights employment, so they won’t have to bother with pension, sick pay, holiday pay etc, and it makes terminating such an employee trivial.
    Not sure if this is an expected side effect of such an ill conceived regulation, or working as intended.

    My other concern is the tax treatment of landlords. How can we convince people capitalism is good if we deny them the ability to acquire capital? Private landlords have had most of the tax benefits of owning and renting property removed, so are barely able to pay the mortgages on the property, let alone make a profit on the investment after maintenance and insurance costs.

  29. Ex-Tory
    Posted June 24, 2020 at 7:55 am | Permalink

    This is slightly off-topic, as your question was primarily about self-employment, but I suggest part of the solution to the economic and unemployment problem would be to abolish corporation tax.

    By the time the EU had got around to copying us, we would have attracted enough companies from around the world to solve our unemployment problem. The short term cost would be small because with the covid crisis company profits and therefore corporation tax receipts are low anyway. In the longer term, any loss of corporation tax revenue would be outweighed by the income tax, NI and VAT generated by the new companies’ employees, as well as the reduction in the cost to the government of state benefits. And some of the lost revenue could be recouped by the likely resulting increase in capital gains tax revenue and by taxing dividends (other than in pension funds or ISAs) at normal income tax rates.

  30. James Freeman
    Posted June 24, 2020 at 7:55 am | Permalink

    Taking on new staff is just too costly, complicated and risky for a self employed person to do.

    * Recruitment costs
    * Understanding over-complex employment legislation
    * Compliance with other legislation (health & safety, GDPR, Equality Act, etc.)
    * Employment contracts
    * Payroll including income tax and 2 x National Insurance contributions
    * Workplace Pensions
    * Holiday pay
    * Sick pay
    * Maternity and paternity leave
    * Employers liability insurance
    * Immigration checks
    * Taking on the risk it not working out or work drying up.

    Larger firms have HR professionals to do this for them and can spread the risk. Not as easy for a first time employer!

    This is a major headache until a firm is large enough to employ an office manager. So a simplified way of dealing with these issues for small companies might be the best approach. For those taking on people on a self employed basis, you could scrap IR35 altogether.

    • Ex-Tory
      Posted June 24, 2020 at 5:41 pm | Permalink

      Here’s something to add to your list, Mr Freeman:

      The BBC announced this morning that any business owner not complying with the covid regulations could face 2 years in jail.

      So: sit in an NHS admin block on full salary throughout the crisis and you’re hailed as a hero. Accidentally let one of your staff fall foul of one of a myriad of regulations when you reopen your pub or hair salon in an attempt to make life a little more pleasant for people, and you’re a criminal.

      Yes, the world has finally gone mad.

  31. Steve
    Posted June 24, 2020 at 7:59 am | Permalink

    The virus did not cause one person to be unemployed. The government panic based on quack science caused every single one of those job losses. Main stream media and people’s willingness to believe whatever they are told has now brought us to a situation where people cling to absurd ritualistic glove and mask wearing and cringe away from others as though they have the plague. This virus has killed virtually nobody that wasn’t already on the fast track to death yet we have allowed our liberty and wealth to be stolen and used by elites for their benefit. Every politician should stop kneeling down to BLM and start begging foregiveness for their rampant cowardice and appalling decision making. The answer to what government should do to help is simple, reduce taxes, reduce regulation and otherwise shut up and do nothing.

    • Fred H
      Posted June 24, 2020 at 5:07 pm | Permalink

      It should have caused quite a number of advisors (fools and scientists and NHS management) to be unemployed over the disaster … no doubt it will all be glossed over.

    • Mark B
      Posted June 24, 2020 at 5:28 pm | Permalink

      Steve

      I am right beside you my friend, right beside you.

      🙂

      • Mark B
        Posted June 25, 2020 at 5:40 am | Permalink

        Lynn and n.a. get a pass but I get stuck on moderation. Please explain why ?

    • Posted June 24, 2020 at 9:28 pm | Permalink

      1,000 upticks for that one!

    • na
      Posted June 24, 2020 at 9:49 pm | Permalink

      well said, Steve

  32. Bob Dixon
    Posted June 24, 2020 at 8:01 am | Permalink

    What hassle with VAT.
    Use a good accounting software. Post to it daily and reconcile the bank & credit card statements. Collect monies due to you.
    How you control your business without this information god only knows.
    The vat can then be filed with HMRC only on line.
    Easy Peezey

  33. John G
    Posted June 24, 2020 at 8:08 am | Permalink

    I’ve been self employed (gardener/landscaper) for over twenty years now and as time has gone by have avoided taking on additional staff even though I have had scope to do so. It’s often been suggested I need more help because of the workload but I always say “I have trouble managing myself let alone someone else”. You need to be a certain character or have the skill or knowledge to go down that route – it’s slightly daunting. Also, customers need to have trust, as would I. They maybe happy with your work but would they be happy with someone else who might have a different approach out of sight shall we say? However, I have often considered it and can see the all round benefits but in the end I take what seems the easier option. Whether the government can help by reaching out and offering advice, some sort of training course (if there isn’t any all ready any?) and provide incentives that might make a difference for some? Certainly I agree it is potentially a good starting point to rebuild businesses despite my own reluctance.

    • Mike Wilson
      Posted June 24, 2020 at 9:29 pm | Permalink

      Take it from someone who was self employed or a company director for most of my 48 year working life – don’t do it. If you have too much work, put your rates up.

  34. acorn
    Posted June 24, 2020 at 8:10 am | Permalink

    The last thing the UK economy needs is more low productivity self-employed. It needs more educated and skilled employees, working for large higher productivity employer organisations. Hence higher GDP per capita

    The UK is criticised for having too many goods and services outside of VAT. The VAT threshold should be reduced to zero and the rates simplified and reduced to be net neutral at £140 billion scheduled for collection this year (pre-virus). That way persons or businesses filing large VAT files while paying little or no income and corporate taxes will ring bells at HMRC.

    Income tax receipts are scheduled to be £207 billion and NI £150 billion this year. Now would be a good time to simplify them back to near straight ad-valorem tax; with a lot less discounts, exceptions etc.

    • Edward2
      Posted June 24, 2020 at 7:21 pm | Permalink

      Have you got any proof self employed people are low productivity.
      It hasn’t been my lifetime experience.

    • Mike Wilson
      Posted June 24, 2020 at 9:31 pm | Permalink

      That made ma laugh out loud. Productivity at large corporates is a joke.

  35. MG
    Posted June 24, 2020 at 8:14 am | Permalink

    The virus didn’t create unemployment. It is the authorities response that created the unemployment.

    • Mark B
      Posted June 24, 2020 at 5:30 pm | Permalink

      +1

  36. Iain Gill
    Posted June 24, 2020 at 8:20 am | Permalink

    The life of a freelancer is that you take gigs with many different client organisations, some large, some small, some close to home, some far from home, some private sector, some public sector.
    Some clients demand that you use your own personal limited company, others demand you use an umbrella company, others than you operate self employed, some even want you on their payroll as a temporary PAYE worker. Freelancers often accept all of these are part of the deal, sometime cycling between them, sometimes doing several in parallel.
    Freelancers can be useful for peaks of work that an organisation could never justify having permanent headcount for. Or they can be useful with rare skills that an organisation will only need for a short time. Or they can be useful to help train up the permanent staff. Or they can be useful to rescue a failing project, because they have done that many times before. Or often they get hired to do the unpopular work that no permanent worker would.
    Freelancers are often in competition with the big consultancies.
    IR35 is still alive and well in public sector gigs, the temporary delay announced during the pandemic only applied to delaying IR35 rollout into the private sector. Any freelancers doing gigs in the public sector are already having to pay for work hotels and travel out of taxed income, putting them at a significant disadvantage to the big consultancies who can put their staff up in hotels tax free.
    IR35 also saps a lot of productive energy out of the economy, as people have to have lots of legal reviews of contracts and so on that simply would not be needed without IR35.
    The Chancellor thinks freelancers are paying too little tax. I will tell you who I think is paying too little tax, it’s the big consultancies and their work visa holders who pay no employers or employees national insurance for the 1st 12 months they are in the country, who are paying corporate tax in havens not here, and so on.

    • a-tracy
      Posted June 27, 2020 at 8:53 am | Permalink

      Iain, don’t these freelancers on these multiple contracts fill in a self-assessment each year and can’t they use the last three tax returns to make a SEISS claim if they can’t work throughout covid19? I thought they could? The government should look at compensation for the IR35 part of the billed work for the previous 3 years as they have contributed the 45.8% tax ni + effectively employers ni (IR35) on that part of their income.

      Why not just put the B&B and Hotel cost into your quote for your service? The consultancy would have to do that?

      John, if Iain is correct about Visa workers paying no NI at all compared to U.K. paye workers paying 25.8% surely this is an easy correction to sort out and a simple tax gain, you’re having to give them health services anyway and government keep trying to tell us NI isn’t insurance anymore!

      • Iain Gill
        Posted June 27, 2020 at 1:14 pm | Permalink

        1st bit, nope cos if you earnt PAYE through umbrella for parts of it and direct from your own company for others, then the rules explicitly exclude help if you earnt more PAYE etc. So vast numbers excluded from help, or getting significantly less help, core Conservative voters too, with kids to feed.

        2nd bit, yes but Consultancy can pay for the hotel from untaxed expenses, the freelancer inside IR35 must pay for hotel from money which has already had tax and national insurance applied. So large consultancy is given massive tax advantage.

        3rd bit. Sadly this is written into some “free trade” deals where we agree to take workers with skills already in oversupply and tax them less than locals, so its not as easy as a quick tax change on its own. this is exactly the kind of deal done at Davos. Some of the countries abusing this most will scream when a British politician eventually has the gumption to change this, but the sooner somebody does the better.

        • Iain Gill
          Posted June 29, 2020 at 3:52 pm | Permalink

          I should also point out in the example above the large consultancy would be reclaiming the VAT on the hotel bill, and the freelancer inside IR35 would have to pay it in full and not be able to reclaim it.

  37. Anonymous
    Posted June 24, 2020 at 8:26 am | Permalink

    However you decide to get people back to work be sure to check it out with the BBC, Piers Morgan, BLM footballers, the teaching Unions and NHS before you announce it.

    Don’t want any more embarrassing U turns now, do we.

  38. Mick
    Posted June 24, 2020 at 8:42 am | Permalink

    The bbc & Sky are unbelievably they are both going out of there way to find disgruntled ex SAGE members or people with degrees on how to open a match box without igniting the contents, we needed to come out of lockdown for the sanity of the public, these are the same media along with MPs shouting for lockdown months ago and now they don’t want it lifted, I might edge my bet that these are the same media along with some MPs that were against Brexit, tuff get over it the world as moved on and so should they and back the overall majority elected government to make the U.K. even greater

  39. Caterpillar
    Posted June 24, 2020 at 8:47 am | Permalink

    Further tinkering with a complex system will remain just that. The two major simplifications would be –

    1) Introduce a sensible UBI and remove minimum wage, statutory sick pay and statutory maternity pay.Remove as many different benefits as possible and add those into a UBI budget.
    2) Introduce a UK equivalent of NZ’s KiwiSaver to simplify pensions and then leave well alone.

    Additionally,
    3) Shift from a home owning to home rental model to ease geographical mobility, or at least no additional stamp duty until 3rd property.

    • Posted June 24, 2020 at 9:33 pm | Permalink

      Houses are the only investment that is tax free. That’s why so much wealth is tied up in low value bricks and mortar productions nothing instead of being available to invest in production.
      Government idiocy again!

  40. a-tracy
    Posted June 24, 2020 at 9:01 am | Permalink

    “So often public sector contracts are too large for small business, and the procurement process is biased in favour of the large companies.”
    I don’t agree they are too large, sometimes projects could be broken down and the specialities could be given directly to the small business that ends up handling all the work anyway and gets that part of the main contract from a large concern with their cut on top just because the public sector doesn’t want to set up too many purchase orders.

    • Fred H
      Posted June 26, 2020 at 9:42 pm | Permalink

      If I remember correctly, its been many years! the bidder had to specify where sub-contracted services would be obtained – so disguising your abilities to win the contract was not allowed.

      • a-tracy
        Posted June 27, 2020 at 8:43 am | Permalink

        There are work around for that, for example, you can bid for part of a large contract, we didn’t get it because they wanted to award it to a single source contractor, however, they were unable to meet the demands in the time specified and we ended up being invited by the contractor to complete the original work we bid for but we weren’t named in their bid.

  41. a-tracy
    Posted June 24, 2020 at 9:06 am | Permalink

    Just take back over the social taxes such as Statutory Sick Pay, Statutory Sick Holiday Pay, Statutory Maternity Pay, Statutory Maternity Holiday Pay.

    All self-employed people should pay an 8% NEST themselves.

    National Insurance isn’t balanced and is unfair to PAYE workers.

  42. Everhopeful
    Posted June 24, 2020 at 9:31 am | Permalink

    So it turns out that SMEs are the bedrock of our economy?
    Not Rolls Royce aero engines or Nissan cars which, ok, have strategic importance but are only a minuscule part of our economy.
    Talk of EU-leaving “cliff edges”definitely not true since vast proportion of economy has no contact with EU..except for red tape, obviously.
    Let’s hope that not too many small enterprises have been royally screwed by house arrest!!

  43. John E
    Posted June 24, 2020 at 9:39 am | Permalink

    Unfortunately it’s easy to outsource routine admin work to other countries. Contractors in the Philipines with excellent English and computer skills have done data entry for me. Thanks to the time zones the work gets done while the UK is asleep and is there online in the morning at a fraction of the cost and effort of getting it done in this country. All this working from home has shown that many people don’t need to be in an office, so do they even need to be in the same country?
    I know businesses that are doing better than they expected through the crisis that are nevertheless going to be restructuring with redundancies because they now have a much better idea of which of their staff are actually contributing and which have been getting carried by the rest of the people in the office.

    • Mark B
      Posted June 25, 2020 at 5:40 pm | Permalink

      Your last paragraph is very true.

    • a-tracy
      Posted June 25, 2020 at 9:18 pm | Permalink

      Correct, my husband said no office, no London weighting on salaries, no boundaries to hiring if working at home. Be careful what you wish for you might just get it with the consequences!

  44. agricola
    Posted June 24, 2020 at 9:45 am | Permalink

    The burden on business be it self employed or corporations is the public sector. Some of the PS can be deemed productive, the medical element of the NHS that ultimately keeps people fit , well and working. Likewise all those who physically collect our rubbish, man our fire stations and police stations. beyond this in the PS is a large negative drag on our industriousness. It is very expensive in salaries and pensions but produces nothing tangible. They exist on telling the productive sector what it cannot do, often minus logic.

    Time has come for this vast PS to justify it’s existence and to be audited down to what is essential. The rule book for HMRC needs to be torn up and replaced by a much simpler system. maybe collecting overall the same amount of tax , but in a much more understandable way and due to it’s simplicity, with far fewer people. I believe they currently employ some 62,000 people. The same principals need to be applied to all PS activity. An enterprise society cannot continue to carry the burden of an excessive and overly intrusive PS.

    In terms of real change I would suggest that the VAT threshold be lifted to a turnover of at least 1/2 million sterling, with subsequent steps to an agreed maximum of 10% after a turnover of 5 million sterling. Corporation tax should peak at 10% and not be relevant to any turnover of less than 10 million sterling. Inheritance Tax and Capital Gains Tax should go altogether. Hire and fire restrictions should not apply during the first year of employment. There should be a nimby free drive for cheap energy.

    Set the stage along the above lines and the UK will thrive once more. The UK will be an attractive place for the home population and the overseas investing corporations to want to be creative. Freeports should be a first step.

  45. Iain Moore
    Posted June 24, 2020 at 9:45 am | Permalink

    Two hours after Boris made his speech in the Commons my hairdresser was on the phone offering me a hair cutting appointment, all social distancing measures thought through, and looking to work Sundays into the evening to get things going and rebuild her client base. How different from the public sector , like the teachers, where the only inventiveness is finding out ways why things can’t be done.

    • Fedupsoutherner
      Posted June 24, 2020 at 7:38 pm | Permalink

      Agree Ian. My hairdresser has her own business and she phoned me with an appointment when the 4th July was first mentioned several weeks ago. The private srctor doesn’t have the privilege of sitting on their backsides whilst getting paid for a long time.

  46. Old person
    Posted June 24, 2020 at 10:14 am | Permalink

    Sir John,
    The main reason start-ups fail is from over complication of the tax system. What is the tax law? What are the current tax rules? What is derived from Statutory Instruments?
    Governments have added to an accountant’s work load requiring them to police the HRMC’s tax system and be able to rule on employment law issues (IR35).
    A start-up business needs an accountant – fullstop.
    HMRC moving to online saves the government from high labour costs, but having to pay for an internet connection and a computer/phone places the start-up’s at a disadvantage.
    How many start-ups have failed with the realisation that an advance tax payment (based on half of the last year’s profit) has to be made in July and January?
    Ridiculous penalties for any omission or non-compliance – penalties for not registering for VAT even when the annual turnover would be below the VAT limit.
    All this while the big accountancy four seem to follow their own path knowing they are too big to be challenged by HMRC.

  47. Polly
    Posted June 24, 2020 at 10:26 am | Permalink

    ”What changes should the government make” ? That question is really easy !

    The Conservative Party should stop being The Labor Party and fully ”deliver a free society” because, as someone told us some time ago…………….

    ”Socialism does not work… to go shopping you don’t have to know a government minister, you don’t have to know the mayor… that is the difference between a communist or socialist system on the one hand and a free society on the other. Because a free society delivers choice and opportunity for all, you can go from having nothing to having a lot and you can achieve something enabling you to give something back… you can move forward on the free society roundabout instead of being stuck at the socialist red light ”

    Interestingly, former UK Prime Minister May, despite apparently being left of center, has clearly taken the ”free society” aspect very seriously as is apparent in the ”Daily Mail” yesterday…………..

    https://www.dailymail.co.uk/debate/article-8449371/CRAIG-BROWN-Theresa-did-32-second.html

    £32 per second would doubtlessly impress anyone in any free society right now.

    So maybe it’s time to take another look at Arthur Wellesley, Duke of Wellington, and what he told us in 1820……….

    ”All the business of life is to endeavor to find out what you don’t know by what you do; that’s what I call “guessing what is at the other side of the hill.”

    What, or who, do you see ”at the other side of the hill” in relation to the ”Daily Mail” report above ?

    I think I know !

    Polly

    • APL
      Posted June 26, 2020 at 6:43 am | Permalink

      “£32 per second would doubtlessly impress anyone in any free society right now.”

      I am amazed that anyone would want to pay to hear Theresa May drone on, and on, and on.

  48. Ginty
    Posted June 24, 2020 at 10:48 am | Permalink

    Defund the BBC see who wants to pay for it (I know few who do) and things will be a whole lot easier for you.

    You cannot move without being shot down because the Left wing have control of the broadcast media.

  49. William Long
    Posted June 24, 2020 at 11:01 am | Permalink

    The VAT threshold is an effective and easy place to start, but Employer’s NHI is nothing more than a tax on employment and at a time when efforts are being made to encourage re-employment there seems every reason to reduce or eliminate it. Particularly for small businesses a major risk in any hire is that the recruit may prove to be wrong for the business but be difficult to get rid of, so there is much to be said for tighten ing the rules on trial periods in the employer’s favour.

  50. Frank
    Posted June 24, 2020 at 11:12 am | Permalink

    There is huge and ever greater institutional bias against sole traders and small businesses. I am a director of a two person business, which has run for 12 years. Our cashflow is lumpy and varies hugely between one year and the next. The Treasury and tax system seem to have no concept or understanding of irregular cashflow; they only look to penalise and question those who do not have regular monthly income. At the start, we were threatened with insolvency by HMRC for non payment of VAT. This was due to a large plc on whose invoice the VAT was payable being slow to pay us which meant that we had no income to pay the VAT incurred. Dealing with accounts takes the best part of one day for one Director per fortnight. Employment would just add another layer of administrative burden – and continued worry of serious sanction if mistakes are made. It is easier to subcontract non-core work. People can only operate in the framework they are given – when accountants bills for a simple business are almost as much as the cost of renting premises, something is wrong. Government and big business set the rules. More regulation = greater costs, which are easier to dilute across large businesses. Small businesses then get squeezed. They stay small and have no incentive to grow. They are often locked in. For many, this suits, but it won’t help create larger disruptors or challengers. Big business is grateful – they can squeeze out their middle competitors and then limit competition for their clients. Government is both blind and ignorant to this – they are happy to talk to trade groups, the CBI and those who can lobby effectively. They like being seen to be busy and engaged with business, even when it is an alien concept to the public sector generally. In reality, this means Government will buy the jumper, but has no interest in how it is made, nor in doing the knitting. They get played.

  51. James Bertram
    Posted June 24, 2020 at 11:51 am | Permalink

    ‘It is now an urgent task to tackle the unemployment the virus has already created…’

    Correction: ‘that the panicky government has unnecessarily created…’

    • Caterpillar
      Posted June 24, 2020 at 7:36 pm | Permalink

      +1

    • Dennis
      Posted June 25, 2020 at 1:00 pm | Permalink

      Yes, it wasn’t WWII that destroyed property, killed thousands of civilians and military people, put the UK in danger of invasion, bankrupted it and led to massive immigration later, it was the panicky govt. which declared war on Germany.

      • Fred H
        Posted June 25, 2020 at 9:36 pm | Permalink

        So you would rather we waited for Hitler’s Germany to overrun the rest of Europe and maybe beyond, before we pleaded ‘I say old chap could you see to it that you leave us alone- thanks awfully’.

      • James Bertram
        Posted June 26, 2020 at 7:22 am | Permalink

        Are you suggesting that wars are not man-made, Dennis?
        Secondly, please don’t compare this shameful and ridiculous virus-episode in our current period with the bravery and suffering of all peoples in the Second World War – a huge insult to our forebears, and gross distortion of history.

  52. rose
    Posted June 24, 2020 at 12:17 pm | Permalink

    We have heard a lot about the gulf between state and independent education, noticed during the curfew by parents and children. There is another thing parents have noticed during the curfew which isn’t being reported, and that is the gulf between what our children are being taught and what the children of the Far East are being taught. We are going to fall further behind in a whole lot of important fields unless this is addressed.

  53. NickC
    Posted June 24, 2020 at 12:24 pm | Permalink

    JR, I have not read others comments so forgive me if this is a repetition, but you asked.

    Stop importing more foreigners and use some of the lavish cash floating around to train British people for the jobs available.

  54. ukretired123
    Posted June 24, 2020 at 12:33 pm | Permalink

    Excellent grasp of the key to understanding self-employed boxed in by a straitjacket of HMRC and IR35, the selfish Banks and legal minefield of both EU bureaucracy and UK employment rules and regs.
    If there was some encouragement that they were not bound /exempt from the bulk of legislation that is really aimed at big companies that needs addressing. Otherwise you would spend sleepless nights on this knowing one false move could kill your business stone dead e.g. If you employ some bad egg….
    Also there is ignorance on the part of many larger organisations on advances in technology as no end of examples occur plus a bias to award work to knowledgeable better qualified folks.
    There could be a national register of SMEs up-to-date qualified staff and maybe a website giving a better view of helpful resources for both those wanting to become self-employed and a free trainee offered or experience like an apprentice scheme.
    In any case the culture of enterprise needs re-fostering as getting on in life “diy” and not “waiting in vain on the passenger train” of boring employment.
    The last person I know who tackled this nettle was ( like Priti Patel) employed in her parents shop, knowing the key simple habits and disciplines of why it is successful.
    More schoolchildren should be allowed to work as shop helpers and Saturday workers etc to get this habit. When I was young I did many different holiday jobs and was rewarded with a wider world experience that is lacking in many today. It gives both confidence and responsibility, discipline and maturity that is lacking in higher education.
    The youth training scheme attempted to do this but was discontinued. Perhaps a modern version of it could be considered involving Higher Education but combining both theory and practice. Information Technology is a good place to start as well.as STEM apprenticeships.
    It is a great pity that you SJR are unique in not only one of the few to ask for ideas on this key subject but that it should have been addressed years ago.
    But better late than never.
    We need to get young folks involved in what realistic careers they wish for their own future and provide specialists from the self employed champions to encourage them.
    There are many, many possibilities but they need grounding in aptitude and financial discipline. The key ingredient Attitude trumps aptitude as always, positive preferred.

  55. ChrisS
    Posted June 24, 2020 at 12:51 pm | Permalink

    In the first instance, I would more than double the VAT threshold for non-incorporated businesses to £200,000. Even a self-employed kitchen fitter will have turnover in excess of £85,000, a lot of which will be the cost of the kitchens he supplies.

    Registering, completing the accounts and charging VAT on labour, are significant barriers for the self-employed, and take time away from profitable work.

    Encouraging the self-employed to use online banking and inexpensive accounting software like the Quickbooks system we use saves a huge amount of time and it has also more than paid for itself by cutting our accountant’s fees in half.

    I completely disagree with the idea of charging anyone NI after they have gone past their state retirement age, unless they are given commensurately higher state pension benefits for the extra years they have contributed as well as sick pay.

    Explain please, Sir John, how you can justify this act of highway robbery?

  56. Sir Joe Soap
    Posted June 24, 2020 at 1:22 pm | Permalink

    Well the employer-employee contract has to be made on a more equitable basis.

    Have a pre-employee status for up to 2 years where the pre-employee takes care of their own tax, health and safety, leave matters independently of the employer, who just pays an agreed fixed amount per day/week/month worked. Either party can leave the arrangement with immediate effect, and other than critical safety and basic confidentiality issues no other regulatory requirements should be made on either party by the other.

    For the small business, there are too many incompetent job-hoppers lurking in the shadows and too many rules and regulations to tie them up.

    Really not that difficult and you would grow a whole bunch of businesses.

  57. APL
    Posted June 24, 2020 at 1:30 pm | Permalink

    JR: “Today I would like your help, by asking what changes to law, taxes and regulations ..”

    It’s the same question Lynne asked on Monday.

    No reply.

    But this is the sort of question you have asked frequently in your blog. So I would like to known.

    Of all the responses you’ve had to previous question, how many have actually resulted in the repeal of legislation or regulations?

    • Mark B
      Posted June 25, 2020 at 5:47 am | Permalink

      Good question.

      No answer came the reply and this missive, like others, stuck in moderation.

  58. DavidJ
    Posted June 24, 2020 at 3:36 pm | Permalink

    IR 35 needs to be binned. It is a huge discouragement to self employment on contract. Allow people to return to normal self employment and remove VAT on such activities too. Enough tax is already paid as income tax.

  59. Posted June 24, 2020 at 3:42 pm | Permalink

    The Johnson/Sedwill government is allowing Huawei, that is the Chinese communist party, to continue to operate in this country (this time in Cambridge). Also BT and Vodafone have been told by the civil service to stockpile Huawei equipment. I presume the UK government is waiting to see the result of the US presidential election in November.

    • Dennis
      Posted June 25, 2020 at 1:11 pm | Permalink

      If the Americans have access to every email, tweet, facebook, telephone call, message in the entire world and the ability to switch off the energy supply of every country (according to the movie ‘Snowden’, yeah a movie but…)without having their electronics in the these systems then I expect the Chinese can do it too so having Huawei will not matter.

  60. Ed M
    Posted June 24, 2020 at 4:28 pm | Permalink

    Dear Sir John,

    Thanks for all your proactive comments about getting people back to work. Really needed (I want my nieces and nephew not to be affected economically by this coronavirus for years to come).

    Thankfully we are now down to +653 new infections, and +154 mortalities (always +154 too many – but at least we’re on the way down).

    • Martin in Cardiff
      Posted June 24, 2020 at 4:55 pm | Permalink

      Unfortunately I cannot accept these figures with confidence.

      Deaths are only recorded as down to covid19 where that is both the diagnosis and it is confirmed by a test.

      I am unsure as to the ease with which such tests are arranged, and as to the scope within hard pressed staff’s workloads to do this either.

      The excess deaths figure is still the best teller, I think.

      • Fred H
        Posted June 25, 2020 at 1:36 pm | Permalink

        second para is nonsense – -often diagnosis is opinion from Care Home, spoken to the Dr over the phone! No visit, no test.

        • Edward2
          Posted June 25, 2020 at 9:38 pm | Permalink

          You are correct Fred.
          Most are not tested.
          It is educated guesswork.

          • Fred H
            Posted June 26, 2020 at 9:37 pm | Permalink

            I contest ‘educated’. They would not want anyone to think death was due to inadequate care, so COVID is suggested.

    • Fedupsoutherner
      Posted June 24, 2020 at 7:33 pm | Permalink

      +1

  61. Fred H
    Posted June 24, 2020 at 5:15 pm | Permalink

    Sir John, what really troubles me is that you regularly post issues and questions to this cross-section of thoughtful voters, originally Tories now not so sure about that!, where you receive intelligent often practical suggestions. They rarely ever get acted on.
    If they are forwarded as representative opinions to the upper reaches of Conservative policy makers and shakers – how can so little result?
    Quite a disturbing thought, wouldn’t you say?

  62. Freeborn John
    Posted June 24, 2020 at 5:52 pm | Permalink

    The silence from London in the face of renewer demands from Brussels to accept their skewed “level playing field” demand and ECJ jurisdiction is very disturbing. Brussels regards the silence as a sign that the U.K. will cave. There will never be an end to their demands until the U.K. learns to say No and mean it. Boris will go the way of Theresa May unless he quickly asserts determination to accept trading on WTO terms or a free trade deal like any other with no EU law or Court jurisdiction.

  63. David Brown
    Posted June 24, 2020 at 6:02 pm | Permalink

    Immediate cut in Business Rates and have a review of how these rates are evaluated. All the evidence from business suggests the system is not fit for purpose.

  64. Ian Wilson
    Posted June 24, 2020 at 7:07 pm | Permalink

    Auto-enrolment is quite a burden for small businesses. There is a good deal of sense in the principle but why, oh why, was it given to the Pensions Regulator instead of HMRC? Effectively we now have four income taxes, PAYE, Employees NI, Employers NI and auto-enrolment. One of the objectives of NI was to fund pensions so there is much duplication. Time for rationalisation?

  65. Ian Pennell
    Posted June 24, 2020 at 8:07 pm | Permalink

    Dear Sir John Redwood

    It is right to be concerned about possibly three million unemployed and other disastrous symptoms of a 25% decline in GDP- only half of which is likely to be made up this year. The implications in terms of a sharp rise in Government Debt-to-GDP ratios and a massive £300 billion Budget Deficit will make it impossible for Boris Johnson’s Government to borrow more going forward- in order to invest in infrastructure- without provoking the wrath of Gilts Markets (which in turn will put up Interest Rates, borrowing costs and Debt servicing costs, making further borrowing to cut taxes and invest in infrastructure counter-productive).

    Printing money to buy Government bonds (via the Banks) so as to keep borrowing costs low will risk a loss of confidence in Sterling- leading to rising Inflation so that is not an option either. Thus, I am pleased, however, that Andrew Bailey, the Bank of England Governor has signalled an end to Quantitative Easing after this year.

    Some form of fiscal retrenchment- in a way that does not harm the economy and kick in the teeth all those new Conservative voters in the North will be required to retain the confidence of Gilts Markets. This should take the form of cuts to Foreign Aid, an efficiency drive in Whitehall and a 25% reduction in Quango budgets and a Land Value Tax of about 2% on high-value property. The Prime Minister should announce these measures in his speech next month to retain the confidence of the Markets. Borrowing can be reduced gradually over the next few years, to maintain well- funded Public Services and build up the Government’s “Levelling Up” agenda for the Regions- which will help support economic recovery.

    Coronavirus has made deliberately increasing the Deficit to invest in the Regions a potentially-dangerous measure that could herald Credit Ratings downgrades and (ultimately) make the cost of borrowing much higher so that it will prove counter-productive. A country with a Budget Deficit of 2% of GDP has the luxury of borrowing more to invest in Infrastructure, a country with a Budget Deficit of £300 billion and a Debt to GDP Ratio north of 100% (as Britain will have by March 2021) would be risking bankruptcy by just borrowig more, even a country with its own currency.

    Clearly more will need to be done, but it is imperative that Boris Johnson uses other measures to raise £300 billion over the next few years to heavily invest in Infrastructure, Skilling-up the unemployed and getting people back to work so that the Economy fully recovers and grows further. These other measures should include selling some of the financial assets and shares held by Government to households, having a well-planned Tax Amnesty programme lasting six months and covering all taxes and fully privatising the Railways by selling off Network Rail.

    Privatisation, though potentially unpopular with some, and measures like Tax Amnesties are the only ways that a Government that cannot borrow more or print money safely can raise funds to support a recession-battered Economy. The Government must do it.

    Ian Pennell

  66. Rhoddas
    Posted June 24, 2020 at 9:45 pm | Permalink

    * Repeal IR35
    * Scrap the Dividend Tax
    * Raise VAT threshold / lower rates of VAT
    * Introduce a nil rate band Corporation Tax
    * Discount Employer NI for first few employees

    What infuriates me is the Brown introduced IR35 and then the Tory Dividend Tax have become such regressive tax policies on the self-employed….. by the Tories… soft left leaning rubbish, unleash the potential of the individual, Margaret must be turning in her grave!!

  67. Cloud
    Posted June 24, 2020 at 10:49 pm | Permalink

    A Dystopian communist nightmare is unfolding.

    • Fred H
      Posted June 25, 2020 at 9:33 pm | Permalink

      is that here in the UK, or are you thinking of China, Russia or N.Korea?

  68. a-tracy
    Posted June 25, 2020 at 9:38 am | Permalink

    “2 million small businesses have been forgotten. As owner/directors of limited companies they didn’t get any income support at all, because they pay themselves via dividends. Most didn’t qualify for grants. Dividends count as ‘income’ when you’re getting a mortgage, but not if you want financial help during a pandemic.” Guido Fawkes

    If the business owner paid themselves dividends they will have paid tax and completed a self-assessment form for tax for the past three years wouldn’t they? So why based on their previous 3 years tax returns aren’t they eligible for SEISS (the self-employed furlough)?

    If someone earned less than £10,000 pa so didn’t pay dividend tax or have to fill in a self-assessment form aren’t they eligible for Universal Credit? Are these two million people not filling in self-assessments or paying tax not eligible for anything and why?

    • anon
      Posted June 25, 2020 at 9:46 pm | Permalink

      Support a decent UBI (combine benefits& admin savings), bring in a flat tax. (Combine NIC PAYE).

      Reduce means-testing, & encourage work.

      CGT same a Flat rate (some exceptions).
      IHT similar flat rate with much higher threshold or abolish it.

      Help pension savers, how about a sovereign fund, very low charges, funding UK infrastructure projects with contracted returns. Help to keep a nice circle on flows within the economy.

      Direct fund build renewables, with installation of solar and wind but only for domestic projects using 90% UK workforce. Auction them off once built or donate to sovereign fund above.

      Reduce immigration. Increase automation, thus productivity.

      Increase STEM courses with direct grants. Similar Doctors Nurses. UK citizens or long term residents only.

      • a-tracy
        Posted June 27, 2020 at 8:33 am | Permalink

        anon – would your flat tax idea include Employers NI for all not just PAYE workers?

        What would be a decent UBI? The same level as a pensioner gets after contributing for a large proportion of their life, so £175.20 per week so £9110.40 and would that be for everyone that rocks or rows to our shore from day 1? Or are you proposing more for nothing? – no community service for this? How does this encourage legitimate work and not just black market trade – I know plenty of people who make a decent income from e-bay sales!

        I see where you’re going with sovereign funds but modern day governments are just rubbish at securing best value work, their Social Housing always costs tonnes more cash to maintain, tonnes more cash to collect rent from, tonnes more cash to plan, tender check it’s just ridiculous – as a small business person you have to look quickly at best value and good quality, my husband could save our local Council a fortune! I offered to work once on the Standards Committee for free, I went for an interview worst experience of my life, I felt like I was in front of an interrogation squad that had already made up their mind, I was only trying to get best value.

        My son is a STEM graduate he’s paid off his student loan which included a living loan for his rent, he worked throughout his degree – STEM graduates get the best paid jobs, they can afford to contribute to their degree, BUT the U.K. is discriminatory against the English and this unfair extra 9% tax burden on English graduates only is a gross insult.

        U.K. doctors and nurses could have their 9% graduate tax paid by the NHS only when they’re working in the NHS. This government needs to do more to get the EU graduates who had these loans to pay their money back – too many are getting away with this – once again the uK workforce are picking up the tab.

  69. Iain Gill
    Posted June 25, 2020 at 10:39 am | Permalink

    I see trump has stopped H1B visas, to reduce the massed imports of cheap Indian nationals working in information technology into the USA, and the tech companies are screaming cos they are having to hire US staff and pay appropriately. That is one thing trump has done well. we should stop our equivalent intra company transfer visas, it is madness to be importing so many cheap workers from India when so many of our own appropriately qualified people are out of work.

  70. Dan Newgreen
    Posted June 25, 2020 at 12:04 pm | Permalink

    Easy stage 1 to reducing taxes is to make them visible to the voter. Employers National Insurance should be shown on every payslip. Pass a law to mandate that all taxes are visible – no stealth taxes. It will make it harder for any government to raise taxes if they are visible, which will hurt Labour more.

    Employers: “Here is the total money I am trying to pay you each month, and here you can see taken away the Employer’s National Insurance, and here is ‘your’ National Insurance, and here is income tax.’

    They are all taxes on income which drive a wedge between what an employer is willing to spend, and what an employee is willing to work for. If you tax employment, you end up with less employment.

    I also think VAT should be shown at the till whenever we spend in a shop, and total fuel taxes should be shown on the receipt when we buy petrol.

    • APL
      Posted June 26, 2020 at 6:38 am | Permalink

      Dan Newgreen: “Pass a law to mandate that all taxes are visible – no stealth taxes. ”

      Can we also have the following clearly identified either on our local council tax, or / and on our annual statement of how the government is misspending your tax.

      Local Councillors salaries
      Quango & NGO salaries
      The amount of money in terms of grants, loans the government subsidiese the ‘3rd sector’

      The cost of the constituency MP.

      In each case, that means the annual contribution to expenses, allowances. salary, pension, communication allowance, cost of free or subsidised drinks in the parliamentary estate, Second home allowance, ‘the whole nine yards’

  71. Lindsay McDougall
    Posted June 25, 2020 at 1:10 pm | Permalink

    Nothing will help the self employed and the private sector generally more than to make sure it has capital available to invest. Unfortunately under this so called Tory government, the State has become an out of control monster – and this was true even before the borrowing caused by the COVID-19 pandemic.

    HS2 will be a white elephant from the day it is born until the day it dies. The best we can do is to ensure that, after the London – Birmingham section is complete, only other parts of HS2 that have synergy with those east west railway lines in the north of England that there is a commitment to build go ahead.

    Heathrow expansion can safely be postponed by a few years, during which time we can look at other options that are compatible with our commitment – enshrined in law – for the UK to be carbon neutral by 2050.

    Spending lots of money on our unreformed free-at-the-point-of-consumption die-on-the-waiting-list health system will not yield a financial return, and probably not an economic one. Modest charges would introduce much needed demand management and provide additional revenue.

    And subsidising railways is neither desirable nor necessary. Vertically integrated private sector corridor or area monopolies, unsupported by taxpayers and not regulated by government, would work better.

  72. Dystopian nightmare
    Posted June 25, 2020 at 1:19 pm | Permalink

    Infant vaccination rates plummeted during the lock down, so why did INFANT mortality rates also plummet to historic lows?

    https://www.naturalnews.com/2020-06-23-infant-vaccination-rates-plummeted-lockdown-mortality.html

    • APL
      Posted June 25, 2020 at 3:26 pm | Permalink

      “so why did INFANT mortality rates also plummet to historic lows?”

      Big money in mandatory vaccination.

  73. a-tracy
    Posted June 25, 2020 at 1:31 pm | Permalink

    NLW 40hr week = £18,137 (minimum wage). £1295.76 employers NI.

  74. David Williams
    Posted June 25, 2020 at 2:10 pm | Permalink

    In a country where I used to live, anyone could employ a domestic assistant and deduct it from their taxable income.

  75. Andy Large
    Posted June 25, 2020 at 2:46 pm | Permalink

    So many great comments here already. My thoughts, speaking as an employer :

    1. Minimum wage should be scrapped altogether. I have never understood the logic in government setting the price of labour and not the price of baked beans. Both market interventions have huge unseen consequences for productivity and the ability of the individual to prove themselves in a new job.

    2. National Insurance system is a joke. Yet another tax designed to make it even harder to employ staff. Needs abolition – to be folded into simple income tax system.

    The tax and employment regulation system needs vast, vast simplification if productivity is to be achieved. But there will be less tax take and therefore this will necessitate a smaller state. So I doubt it will happen (at least until the very, very big reset that is coming up pretty soon). Only then will people see how far tax and regulation have bent our economy and stifled innovation and growth.

    • Fred H
      Posted June 25, 2020 at 9:31 pm | Permalink

      1) A minimum wage rate was to avoid exploitation by employer – have you looked in a mirror?
      2) NI has merit, folding it into the muddled Income Tax can only lead to disaster. What would simple Income Tax look like – pray explain.

      • a-tracy
        Posted June 26, 2020 at 10:36 am | Permalink

        A simple income tax (if you retained a personal tax-free amount) FredH would be 45.8% for everyone earning over £12,500 if you use the current tax-free amount or £9,500 if you use the current NI free amount for everyone the same as PAYE workers contribute plus 8% NEST for all.

        • Fred H
          Posted June 26, 2020 at 9:34 pm | Permalink

          My question was intended for A.Large but since you kindly responded – why 45.8%.?

          • a-tracy
            Posted June 27, 2020 at 8:17 am | Permalink

            FredH

            13.8% Employers National Insurance
            12% Employees National Insurance
            20% Income Tax

            At the moment National Insurance (NI) is not a cumulative tax as Income tax is, so if you earn a large amount with bonus one month you pay a higher national insurance premium but in the next three months if your pay is lower you don’t get an NI rebate that year as you do income tax. Also at the moment retirement age workers who continue to work don’t pay Employees NI the Employer continues to pay their contribution to the taxman.

  76. APL
    Posted June 25, 2020 at 5:25 pm | Permalink

    The administration you support has handed out £ billions over the last three months. What measures did you have in place to minimise corruption?

    Given our experience with Grenfell Tower where a relatively modest sum of money was pilfered and robbed, what guarantees can you give that the money made available to tide people and businesses over during the artificial and unnecessary COVID-19 shutdown crisis was not similarly stolen?

  77. XYXY
    Posted June 27, 2020 at 12:37 pm | Permalink

    One other point re IR35. Removing Employers NI would take away most of the reason to fight over “employment status”.

    That is the largest amount of money at stake in the equation at 15% throughout the worker’s income (on top of all the income tax and employees NI that is paid by employees).

    Right-leaning think tanks have urged that in cv19 recovery we heavily reduce Employers NI – perhaps that is an opportunity to phase it out. Then we can one day all just be workers, all paying the same taxes and free up the courts form this nonsense.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page