Record high levels of self-employment in the UK

New figures from the Office of National Statistics (ONS) show that 4.97 million people in the UK are now self-employed professionals.

This means that self-employment is now at record high levels across the country. The continued growth in self-employment has been turbo-charged of late thanks to a rise in the number of female entrepreneurs.

In Q2 2019, the number of women registered as self-employed soared by 51,000.

The Association of Independent Professionals and the Self-Employed (IPSE) has responded to this new data by urging the Government to do more to support a way of working that’s allowing individuals to stay in control of their work-life balance.

Andy Chamberlain, Deputy Director of Policy, IPSE, said: “This rise in self-employment is great news for the UK economy and underlines how attractive this way of working is for millions of people.

“Access to freelancers is a key driver of innovation and productivity for business so we must do everything we can to help them flourish.

“I’m not surprised that this boom is being powered by female freelancers. Our research shows that the freedom and flexibility of being their own boss really works for highly-skilled women who want to take control of their working lives.

“The Government must urgently consider the needs of this growing group and take action to improve pensions, simplify the tax system and bring in fair parental rights.”

In terms of tax simplification, HM Revenue and Customs’ (HMRC) new digital tax reporting system, Making Tax Digital (MTD), has recently launched for all VAT-registered small businesses and self-employed individuals.

All individuals with an annual turnover above the £85,000 VAT threshold have been legally required to register for the MTD for VAT system. Once registered, individuals will be required to submit digital VAT returns on a quarterly basis.

The MTD for VAT platform is designed to reduce errors in the reporting process – helping you to better keep track of the VAT you owe – whilst ensuring the information HMRC holds about you is 100% correct.

Some 1.2 million VAT-registered businesses will have to comply with MTD for VAT as part of the first phase of MTD’s roll-out.

Some 490,000 should have already submitted their first quarterly digital VAT return by 7th August, but 120,000 of these have yet to register for Making Tax Digital for VAT.

In usual circumstances, HMRC would hit these firms with instant late filing penalties worth £100. However, it has decided to waive these penalties for the first year of MTD for VAT integration.

However, the Federation of Small Businesses (FSB) believes HMRC should consider waiving these late filing penalties for an additional year, to allow businesses to prepare fully for the UK’s impending departure from the European Union (EU).

Mike Cherry, National Chairman, FSB, said: “Given that one in four of those mandated to submit returns on 7th August haven’t done so, the 12-month amnesty should now be extended by at least another year.”

Making Tax Digital for VAT support

At TaxAssist Accountants, we have spent considerable time developing the right support services to help small businesses through the Making Tax Digital for VAT implementation period. We can advise you about compliant software like QuickBooks and Xero, which can help make managing your books easier, wherever you are.

For a free initial consultation on your Making Tax Digital for VAT obligations, call us today on 0203 397 1542 to make a free initial consultation or email us with your concerns via our online enquiry form.

Last updated: 25th September 2020