Consultation on tax relief for self-employed training welcomed
by Alan Little
The Association of Independent Professionals and the Self Employed (IPSE) has welcomed a proposed government policy to make new skills training tax deductible for contracting professionals and other flexible workers.
If implemented in policy, the proposal would rectify a flawed system that allows conventional employees to claim tax relief on training but not the country’s fast-growing flexible workforce, to their disadvantage.
The world of work has undergone a profound technology-driven transformation, with new forms of automation and the rise of Artificial Intelligence encouraging more people to embark on freelancing and contracting careers. Since the ranks of the freelancing self-employed are expanding daily, IPSE has expressed ‘delight’ that the government will proceed with a consultation on how to tax work-related and independently-funded training for the country’s flexible workers.
IPSE has long advocated tax relief for training amongst freelancing workers, saying that it should not be confined to just formal qualifications. This is because sole traders have training needs beyond their areas of expertise, such as generic training on running a business, including marketing and accounting.
While welcoming the new consultation, IPSE raises one issue of contention: the proposal to apply an annual cap on the tax relief spending for the self-employed, which the trade association believes is unnecessary, since most nations belonging to the OECD (Organisation for Economic Co-operation and Development) who permit training costs to be subtracted from taxable income do not apply such limits.
Emphasising that the existing system not only discriminates against the self-employed, but also undermines the government’s stated aim to foster a flexible labour pool capable of adapting to ever-evolving technological change, IPSE’s Policy and External Affairs Officer, Imogen Farhan, said that broadening tax relief to all training, irrespective of whether it culminates in formal qualifications, would level out the playing field for self-employed freelancers and contractors, a sector of the workforce that includes Umbrella Company employees. The move would help increase these workers’ earning potential and help enhance the competitiveness of the country’s economy, she added.
Farhan continued: “Benefits like flexibility, control and autonomy have led many more people to launch into self-employed careers in the last ten years. But while there are clear advantages to self-employment, there can be challenges too. That is why we are delighted by this very positive step from the government and look forward to helping shape even more progressive and supportive policies to tackle these challenges in future.”