IPSE (the Association of Independent Professionals and the Self-Employed) has given its wholeheartedly support for a a government proposal to make training for new skills tax-deductible for the self-employed. This would match the case as it currently stands for employees – balancing a flawed system that had disadvantaged the UK’s flexible labour market.
The rise of automation and AI has driven a fundamental shift in the world of work, pushing more people into self-employment. And with more people moving into this sector by the day, IPSE is delighted the government is consulting on how to tax self-funded, work related training for the UK’s booming self-employed population. It is a move IPSE has long called for.
Tax relief should also not be limited to formal qualifications. The training many sole traders need may not necessarily be specific to their individual trade: instead it is often more general training on how to run a business – such as marketing or accounting.
Overall, IPSE welcomes the government’s consultation. It does, however, question the necessity of an annual cap on tax relief spending on the self-employed – an issue brought up in the consultation document. Most OECD (Organisation for Economic Co-operation and Development) nations who allow training to be deducted from taxable income impose no such limits.
“IPSE has been campaigning for a long time to give tax relief to self-employed people training to develop new skills,” says Imogen Farhan, IPSE Policy and external affairs officer, commented: “The current system both unfairly disadvantages the self-employed and runs counter to the government’s goal to create a flexible labour market that can adapt to rapid technological change.
“Extending tax relief to all training – no matter whether it leads to formal qualifications or not – would level the playing field for the self-employed. It would also help the self-employed develop their careers, increase their earning potential and, more generally, make the UK economy more competitive,” she says.
IPSE recommends the government follow the lead of many OECD nations by not imposing an annual cap. It is difficult for IPSE to imagine a cap that would be suitable for all sectors and earning levels. Instead, the government could minimise the risk of misuse by introducing clear rules on the types of training people can undertake.
“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,” concludes Farham.