Budget: sector bodies say NI change 'deeply disappointing' for freelance PRs

The PRCA and CIPR have both expressed concerns that announcements by Chancellor Philip Hammond in today's Budget will tighten the financial pressure on the PR industry's freelancers.

The PRCA has also said that the Business Rates regime is need of reform - at a time when many organisations are facing steep hikes in their rates.

It and the CIPR have significantly different figures for how many PR professionals are freelancer - the CIPR's recent State of the Profession report puts it at 18 per cent, while the PRCA says it is "nearly one in 10".

However, they concur in their worries over changes to National Insurance contributions (NICs).

Freelancers must pay NI contributions of nine per cent in the tax year 2016-17 on profits above £8,060 - although this rate drops to two per cent for profits above £43,000.

Hammond said this would raise to 10 per cent for the year 2017-18, and 11 per cent for 2018-19. This brings it closer to the 12 per cent rate for NICs from employed workers, and reflects a change last year to allow self-employed workers the same state pension as employees, Hammond said.

Also see: The Budget will put public sector comms pros to the test immediately

PRCA director general Francis Ingham said: "Nearly one in ten of the professionals in our industry are self-employed; today's changes to National Insurance will be deeply disappointing for them.

"This new tax can result in only two possible consequences - lower take-home pay for freelancers, or higher bills for their clients. Neither is desirable".

According to the Treasury, the NICs increase will cost every self-employed person on average 60p more a week in tax.

However, CIPR president Jason Mackenzie said freelancers were "part of a wider freelance sector that contributed £119bn to the UK economy last year".

He said: "Their entrepreneurial spirit should be applauded. They take on considerable risks: not having a guaranteed regular income, paid holiday, sick leave, workplace training budgets or access to statutory maternity and paternity schemes.

Mackenzie noted that the Budget also reduces the tax-free dividend allowance for directors, which includes freelancers operating as a limited company, from £5,000 to £2,000.

"The rise in National Insurance contributions for the self-employed and the reduction in tax-free dividend allowances for directors and shareholders announced in the budget could pour cold water on an important part of the economy. There should be more support and encouragement for freelancers, such as the increase in what they are entitled to from the basic state pension."

The PRCA's Ingham also commented on Hammond's announcement that small businesses losing the Small Business Rate Relief would have any increase to their rate capped at £600.

"Welcome as this is, for many, any increase at all will be painful. The vast majority of PR businesses rent rather than own their premises, so they will be unpersuaded by the notion that rising property values should translate into higher taxes. The Business Rate model is simply not fit for purpose," he said.

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