Opinion: Who Cares For the Self-Employed and Small Businesses?

Peter Bromiley ACA, from AMS Accountancy, shares his thoughts on the complexity of tax law for small businesses and the lack of understanding and accurate reporting from the media.

Labour seems to prioritise the public sector and beatify anyone working in health or education. The Conservatives seem in thrall to big business and take their tax policy advice from the Big Four firms of accountants. But no one seems to be batting for the self-employed or small family businesses - despite them being one of the most important and hardest-working sectors of the economy.

And because of the public’s ignorance of tax law, they seem to be the easiest target to squeeze. George Osborne and Philip Hammond have been massively increasing the taxes on businesses and their owners in the last couple of years – with virtually no outcry because the average member of the public, the average MP, and the average political journalist – have no understanding of what is happening.

It is only when something familiar happens – i.e. a Class 4 National Insurance increase of 1%+1% that commentators perk up.

The fact is that the triple lock (no increase on VAT, NI or Income Tax) was broken in April 2016 when dividend tax was brought in.

Dividends are how the vast majority of the self-employed get paid (via their Limited Companies). So taxing dividends was effectively an increase in income tax (7.5% on net dividends). Dividend tax is just an extra lump of income tax which means the triple lock was already broken.

All the hoo-ha that is happening now in respect of National Insurance should have happened in 2015 or 2016!

Peter Bromiley ACA