I was kind of challenged by one of our local councillors to write a blog post on this topic. I want to be clear that I’m not being political here – although the discussion was on what one party could learn from the election about engaging the “aspirational”, I am making these general points to politicians of all parties.
You see, I don’t see much mention of the self-employed person, the sole trader, in all of the political talk. When offers are made “for small businesses”, they’re often along the lines of helping them take on apprentices, or cutting the National Insurance for people who take on their first employee. However, there are around 3.6 million sole traders in the UK – a significant proportion of the 5.2 million SMEs in the country (source: British Chambers of Commerce, The Guardian). So what are the parties doing for us? Were we mentioned in their manifestos? If they’re so keen to get the country on its feet and moving upwards, shouldn’t they take us into consideration?
Here’s a personal list of things I’d like to see the politicians (both those in government and those formulating their policies outside government) to consider. I also asked in a small business Facebook group and got some extra ideas in areas I know nothing about, like VAT and childcare issues – all contributions are referenced below.
Acknowledge our existence
It’s time for people to actually acknowledge we exist in great numbers, it’s not just about small businesses who employ people. I’d like to bet that everyone knows someone who’s a sole trader. We sort out your gardens, do your accounts, paint your houses … Talk to us about what we need, include us in your plans. 3.6 million voters isn’t a small number …
Sort out the help HMRC gives us
Top of my list here is restoring the personal training sessions that the HMRC used to run. When I was setting up my business, I went to a training session in our city library. It was great – one trainer, about 20 people, and she tailored her advice to our individual needs (me, working and self-employed at the same time; a partnership; people using cars; people who needed food hygiene certificates) as well as covering general issues. Now, that doesn’t seem to happen, and you can just look at a range of videos online. You can’t ask those videos questions or network with the other people attending the course, can you!
My colleagues mentioned the HMRC, too. Alison Mead from Silicon Bullet made the point that it was now much harder to navigate to the pages about VAT including submitting your VAT return. Katie Walker from I Say Digital was fed up with having to phone them and be put on hold for up to 45 minutes, commenting that we’re not allowed to email them – “why can’t they sort out the security to do that?”
Sort out VAT
While we’re on the subject of VAT, several of my fellow sole traders had something to say about this issue. Alison Mead, as a bookkeeper and Sage consultant finds that people need more support and advice on VAT in general. Heather Barber from Minty Moose raised the issue of the VAT on digital products. This applies VAT to all digital products, leading people who don’t have to be VAT registered otherwise to have to register, and those of us who only sell through resellers (with eBooks etc.) having to lose profit or put our prices up. There was a huge outcry at the time, which was pretty well ignored- surely now is the time to review things, see what effect they are having, and work on making things more fair.
There’s also a thought that the VAT threshold should be raised: as Tony Antoss Puplett from Flintshire FItness Supplies mentioned, it can make a big hole in your income if you’re just above the current threshold, and “20% is still a killer if you are a bricks and mortar business competing with online businesses”.
Don’t pile the tax on
I have no problem with paying tax. No problem at all. The bit of my income that pokes up into the higher-level tax bracket – fine, take some more off me and redistribute it. Cool. However, the payment of tax on account system (whereby once you get to a (quite low) profit level and associated level of taxation, you have to start paying estimated tax in advance) can be crippling. Basically, you end up paying two lots of all of your tax in one year. The year I tipped over the limit, I ended up paying 49% of my total income for that year in tax, rather than my usual around 24%. If I hadn’t known it was coming (which many people don’t know), that could easily have caused a big problem, and I k now people who it has really knocked back.
Limited companies and other forms of small business don’t have this issue. I can’t think that it raises more revenue for the tax office, since they just get it all a year early and don’t get anything out of your last year trading. Taking this away would have a BIG impact at surely not much cost. More info on how payment on account works here.
Give us the odd tax break
There’s a scheme for giving small businesses relief on their NI for their first employee. This hasn’t apparently had much takeup. Maybe there could be a rise in the threshold at which we start paying NI, or a let-off for those earning a low amount from their business, but more than the current £5,500-odd covered by a Certificate of Low Income – I don’t mind paying the amount I do, but when people are starting out, it would be nice to give them a little boost. If money was set aside to cover this scheme for employing, maybe it could be released to promote such a scheme.
Make it easier to access benefits
Self-employed people can claim statutory sick and maternity pay. But it’s really complicated trying to work out how to do this, and I don’t know many people who’ve managed.
And while of course it’s important to make sure people don’t over-claim or claim when they shouldn’t be, it seems to be too difficult at the moment. Christine Whyte Hahn from Iesha’s Attic reported that it was impossible for her to claim any benefits when she was starting her business because the authorities demanded to see her audited accounts, which she had not yet had to provide to do her self-assessment, etc. (In fact, sole traders don’t have to provide full audited accounts to do their self-assessment. They cost several hundred pounds to get from an accountant, potentially wiping out the value of any benefits).
Sarah Banks from Banks’ Business Solutions also shared that it’s not possible to get childcare vouchers as a self-employed person, limiting her opportunities to grow her business.
If you read my Small Business Chats, so many of my interviewees starting their own businesses have childcare responsibilities. Surely they could be encouraged to grow their businesses by giving them the same childcare vouchers that workers can access?
Make it easier to access training and support
As well as the HMRC problem, it’s difficult to access training and support. I’ve done a few courses sponsored by service providers, which give some training but then include a pitch for the sponsor. Christine Whyte Hahn has had difficulty accessing government grants that are already there and waiting for her, being “passed from pillar to post”. Maybe some of the money the big corporations aren’t paying in tax could be reclaimed to pay for educating micro businesses so that they can make more money and give more tax back into the system!
Help us by lobbying the banks
I have a simple business model which doesn’t require loans, special banking facilities, a business bank manager, etc. But I’m still expected to have a business bank account – basically paying a fee to have an account whereby I don’t take advantage of any of the facilities. That doesn’t seem fair to me, and I would like some kind of regulator to talk to the banks – who are supposed to be helping small businesses with business loans, etc. – and get them to remove this stipulation and give free basic business accounts to those of us who don’t need the whistles and bells.
This has been a personal list, with the help of a few friends. Of course, I’m not the only person to be thinking about this, although my emphasis is firmly on those of us who are micro-businesses – sole traders. The lovely folks at Enterprise Nation came up with a list, too, which covers things like employment regulation as well, so supporting the small and mediums as well as the micros. If you have any other suggestions for things that the politicians could do to help sole traders / micro businesses, do please pop a comment below. And if you have a friendly politician in your circle, maybe you’d like to show them this, and Enterprise Nation’s list …
Thanks for reading! I’ll be back to the Word tips soon, but this felt important to write about.