As self-employed nears 5m, support for the little guys can be as Easy as 123

By Laurence Taylor

Founder and Chair, Easy As 123

Soon, the stigma will be gone, the tired old retort when you tell someone that you are self-employed – ‘unemployed, you mean?’ – will be as stale as last night’s Deliveroo’d pizza.

The stats don’t lie: the Office for National Statistics confirm there were 4.8 million self-employed people [SEPs] in 2017 (1 in 7 of the workforce), and by the end of 2020 there will be more SEPs than public sector employees.

This increase accounts for 45% of the growth in jobs since 2008 and is especially prevalent amongst 16-30 year-olds (thanks to the gig economy) and the 55+ year-olds (who are leaving careers early to become consultants in their old sector or set up the organic cheese shop that they have always dreamed of). So, why is this phenomenon not attracting more positive news?

We think the reason is trust: that HMRC, sellers of financial products like mortgages and insurance, and landlords just don’t trust SEPs. HMRC in particular seem to have a working assumption that they are going to lie on their Tax Returns: not declare income, claim false expenses.

‘by the end of 2020 there will be more SEPs than public sector employees’

And articles joshingly listing the 10 Best Excuses for Missing the 31^st January Deadline don’t help. This all leads to a lack of understanding of the challenges of being self-employed, and exacerbates the isolation and disconnection felt by many SEPs (we welcome the launch of Community, the first ‘union’ for the self-employed).

This has always led government to try to change SEP’s tax status to PAYE so that they pay the correct tax monthly – hence, Making Tax Digital.

Witness also HMRC taking gig economy companies to tribunals to move workers to employee status (Uber lost their first hearing, as did Addison Lee and Pimlico Plumbers; Deliveroo won).

This distrust has spread to financial services (ask any SEP who has applied for a mortgage if you dare) and to landlords requiring larger deposits from SEPs.

So, given the relentless march towards self-employment, we believe that SEPs have to take steps to prove their trustworthiness. It certainly doesn’t help that their financial management is often so poor, and using DIY solutions like QuickBooks and 1 Tap Receipts to do their books consistently late and inaccurately increases scepticism.

Easy As 123 offers a total digital bookkeeping solution that is 100% accurate and on-time and takes care of everything including submission to HMRC. Solutions like ours can help to build trust, not just between SEPs and HMRC but with financial services and landlords who must be able to have as much confidence in a Tax Return to evaluate a customer or tenant as a payslip.

‘it is due to become a condition that most people experience at least once in their working lives’

It also needs action from the other side: the government-commissioned Taylor Report on the gig economy’s model of treating workers as self-employed suggested a hybrid ‘Dependent Contractor’.

Instead of tinkering with labels, we feel that government should be striving to improve the working conditions and living standards of SEPs (e.g. National Minimum Wage, parental leave, access to pensions and savings) and how they are viewed by banks, insurance companies, and so on.

We support IPSE’s view that many SEPs choose that status because it suits their lifestyle/work-life balance, and so it shouldn’t always be seen as a negative choice, not when it is due to become a condition that most people experience at least once in their working lives.

Indeed, many of our workers at Easy As 123 will continue the bookkeepers’ tradition of being self-employed (maybe because they’re the only ones who can properly deal with submitting their Tax Return to HMRC!).