Government proposals to change the way tax is reported and
paid by the self-employed would create cash flow issues, stifle small business growth
and lead to an exodus of talent from the events industry, experts have warned.
HMRC launched a consultation in June, seeking views on proposals
for more ‘timely payment in Income Tax Self Assessment (ITSA)’.
Currently, sole traders in the UK file a self-assessment
return once a year and make tax payments in January and July. However, HMRC
proposes tax payments are made more frequently – around every three months –
which it says would be closer to when income is earned.
While HMRC says the changes are designed to help taxpayers manage
their tax liabilities more easily, the Association of Chartered Certified
Accountants (ACCA) is concerned they will not work for many freelancers and small
business owners in the events sector.
Fluctuating income
Glenn Collins of ACCA UK said forecasting income in-year for
self-employed workers in events would be ‘genuinely difficult’ due to income fluctuating
‘significantly from month to month’. He also expressed concern for those
starting out who may wish to invest their first profits into their business
rather than hand it over to HMRC.
“The biggest concern is confusion and complexity within an
already confused and complex system,” he said. “It is the lost cash flow
through to people who may not be able to actually pay those extra taxes early.
“And our particular worry would be how a fledgling business would
cope with that. Also, income levels can vary immensely, particularly in
seasonal sectors like events.”
Cat Kevern, managing director of NOWIE (Network of Women in
Events), which is currently rolling out its Freelance Accelerator programme to
support women and non-binary events professionals into a freelance career in events,
fears the changes will add to the existing load those considering setting up on
their own were expecting.
“From the applications we’ve already received, we can see
that people are already concerned about the bureaucracy of self-employment,
managing inconsistent income and whether freelancing can provide a financially
sustainable career.
“Additional tax complexity and an upfront financial burden
could create yet another barrier for those considering the leap to freelancing
and pose a particular challenge in the fragile first year.”
Freezing the talent pipeline
It is well-known that the events sector already relies on
freelancers to take on short-term contracts or fill in gaps at short notice. The
freedom and flexibility presented by self-employment is also attractive to event
professionals with children, disabilities or caring responsibilities, notes
Kevern.
She said: “The industry simply wouldn’t function without
freelance talent, and the quality of the events delivered in the UK is all the
better for their work. The reality is that if freelance work becomes
inaccessible, we will lose a large number of event industry professionals. Of
those, a disproportionate number will be women.”
The consultation also seeks views on an initiative that
would see tax created by self-employed work collected through PAYE if an ITSA
taxpayer is also employed, and the removal of delayed payments for those starting
a business.
Collins of the ACCA said this method would create a confidentiality
issue, because tax taken through payroll would mean an employer would have
insight into an employee’s business income.
He said: “This is a problem, because it could reveal
someone’s plans to build a freelance business or eventually leave employment.
"The whole thing goes against the government's plans for growth. We've got another arm of government looking at how to grow businesses, but this would potentially take out cash flow at an earlier stage and prevent that growth for small businesses."
Kevern said the practice could deter some event professionals from becoming self-employed.
“For many people, building freelance work alongside employment is the
safest way to test whether self-employment is financially viable before making
the leap. Creating additional uncertainty around that transition could deter
people who might otherwise go on to build successful freelance careers.”
The consultation closed on 4 August. The government is expected to publish a response in this autumn with relevant legislation introduced in a Finance Bill ahead of implementation in April 2029.
ACCA suggests businesses or sector representatives who are concerned about the changes write to MPs and ask them to monitor and raise concerns if legislation comes
forward.
Emma has been a journalist for over 20 years, with experience working in both local and trade media. After reporting on the fast-paced world of hospitality for many years, Emma is enjoying this transition into the equally exciting world of events to cover Holly Patrick’s role on AMI and M&IT while she takes her maternity leave.
