After another year of being seemingly overlooked in government public policy, a forthcoming general election could shift the dial when it comes to self-employment being embraced and encouraged in policymaking.
We also review how the self-employed can mitigate the upcoming challenges of rising energy costs, the increasing difficulty of dealing with HMRC and the need for training in a changing workplace.
Feeling the squeeze from spiralling living costs
It may be your energy bill. It may be your weekly supermarket shop. It may even be your mortgage or rent payments. We’ve all felt that the cost of living has increased quite significantly in recent years, with inflation, in most cases, outstripping any increase to the day rates charged by freelancers. Money just doesn’t go as far as it once did.
Unfortunately, from the 1 January we’re set for a further increase to energy costs, with the price cap increasing by 5% for the typical annual energy bill.
And with freelancers reporting a rise in late payment among clients, freelancers could be understandably nervous about the impact of these factors on the profitability of their self-employed business.
Some may even have debt incurred during the pandemic which could become more problematic to pay off.
So what can be done? Well one option is to increase your rate. Any decision to increase your pricing should, of course, consider how your client may react and clear, personal communication is essential for relaying any increase.
If a price increase isn’t quite right for your business, you could instead consider diversifying your offering or establishing an entirely new side hustle altogether.
Such actions may reduce your reliance on client work and provide you with additional revenue streams which in turn may alleviate the pressures of rising living costs.
Tax will take up even more time
Whether its tracking down the right tax form, proving your entitlement to a tax relief or corresponding with HMRC, tax takes up a lot of time for the self-employed.
The scrapping of mandatory Class 2 National Insurance and a new ‘offset’ mechanism for the off-payroll working rules from April next year will introduce a small dose of simplicity for the self-employed.
But on the whole, dealing with the taxman is now as difficult as it has ever been. Indeed, new figures show that the average wait time for HMRC’s phonelines has increased by more than double since 2020, from 10 minutes to 24 minutes.
If you hear hold music, you’re a priority
Seemingly unphased by criticism of its decision to close tax helplines for an extended summer period in 2023, HMRC recently announced it will only be answering “priority queries” in the run-up to January’s self assessment deadline.
Of course, for a self-employed taxpayer in need of support, their query is a priority – especially when the costs of misunderstanding your tax position can be high.
Trawling through HMRC guidance online does more than sap freelancers’ time away from their business – it can cause significant stress and anxiety for people who just need a straight answer to their question.
Freelancers should prepare to dedicate more time to the financial health of their business. By regularly updating invoices and expenses, managing key financial deadlines and tackling admin challenges sooner rather than later, freelancers can save themselves time, money (and headaches) in the long run.
Taking time to retrain or upskill
Developments in the world of work, from a widespread shift to remote working to a boom in free-to-use generative AI tools, are transforming our understanding of the word ‘work’ itself.
These rapid cycles of innovation also create opportunities for freelancers to boost their efficiency and diversify their offer – but only if they can find the time and money to get ahead of the curve.
Training and working compete for your time
Learning new skills, and keeping current ones up-to-date, can help freelancers reinvigorate a stale business offer and escape a cycle of stagnant income. However, IPSE research from Summer 2023 revealed that over half (51%) of freelancers had not undertaken any professional training in the preceding 12 months.
For freelancers, time spent learning something new is time not spent on their core business activities, working on projects or generating leads – something that freelancers who already struggle to make ends meet can’t afford.
Unfortunately, public policy often fails to plug the gap for those in this position, despite various forms of skills support delivered to employees by government. IPSE has consistently called for money spent by freelancers on learning new skills to be made tax deductible – as is the case for funds spent on maintaining existing skills – as a means of redressing the imbalance.
As 2023’s workplace trends turn to common practice in 2024, freelancers will benefit by starting the year with a skills self-audit and being open to learning something they hadn’t previously considered. Skills that aren’t core to your main business – whether that’s becoming more proficient in thought leadership, networking or public speaking – could bring new opportunities to your business’ doorstep.
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