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Tax seen as major burden by self-employed

The Cambridge Satchel Company’s founder Julie Deane has blasted tax as being one of the main burdens self-employed workers face.

Writing in ‘Self employment: an independent review’, a publication commissioned by the Prime Minister, Deane expressed her concerns around self-employed workers’ lack of basic taxation knowledge,

While researching the 41-page document Deane held detailed discussions with trade and professional organisations, and also used results from an online survey.

In the review, Deane slammed taxation as “an administrative burden, a barrier to growth, and an issue that could benefit from improved simplicity and better advice”, recommending that the government looks into this issue for the self-employed in more detail.

To counteract this, Deane called for better education for young people as her leading recommendation. The respondents’ lack of knowledge regarding cashflow, bookkeeping, and in particular, taxation regularly surfaced as a concern. “These are skills that would benefit many adults regardless of their employment status and yet they are still lacking from our Curriculum,” said Deane.

The tax definition of whether someone is defined as self employed or employed also posed a problem for many of Deane’s survey respondents.

A section of the review was also dedicated to resources and support the self employed can use to alleviate their tax troubles – listing HMRC, ICAEW, Xero and webinars as common locations used. For self-employed workers starting out, accountants were also listed as a common avenue for financial advice, with HMRC included for tax advice. For those who felt they needed more information, bookkeeping and advice on tax matters were cited as the biggest challenge.

While tax knowledge was listed by many self-employed workers as a major problem, their struggle to maintain a work-life balance superseded their tax concerns as the number one issue faced.

Outside of taxation and education, Deane’s other recommendations included ensuring advice and support is easily accessible, self-employed maternity allowance is enhanced, shared work spaces are increased, and flexible solutions for financial issues such as mortgages, pensions and insurance are provided.

Responding to Deane’s review, David Cameron said: “We’re already helping with tax allowances, start-up support and with our ongoing commitment to cutting red tape, and given Julie Deane’s experience of starting her own successful business, she was the ideal person to shine more light on the needs of self-employed people.”

After graduating from Cambridge University, Deane worked as a chartered accountant. She struck business success in 2007 when she launched a range of leather satchels which subsequently featured in a Google Chrome commercial. She invested £600 of her own money into her business which she started from her kitchen table. The company now turns over £10m per year.