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Sole traders step-up manifesto asks as confidence hits fresh low

FSB is calling on all political parties to put the self-employed community front and centre when drawing-up business policies for their election manifestos as its latest research shows confidence among sole traders in negative territory for five consecutive quarters.

  • New Small Business Index (SBI) findings show optimism among self-employed in negative territory for fifth straight quarter
  • Sole trader revenue growth falls behind wider small business community while struggle to obtain external finance worsens
  • The Federation of Small Businesses (FSB) calls for delay to ‘off-payroll’ rule switch and more support for self-employed parents

Fresh findings from its full Q3 SBI report, published today, show the confidence measure for self-employed respondents stands at -7.5 in the three months to September. Well over half (62%) of sole traders do not expect their performance to improve over the coming three months, with more than one in ten (12%) expecting their performance to be ‘much worse’.

The new research shows revenue growth among the self-employed lagging behind the wider small business community. Around a third (35%) of sole traders report that revenues were up in Q3, while four in ten (40%) say they were down. Across the whole of the 1,200 small businesses surveyed for the study, the figures stand at 38% and 35% respectively.

Elsewhere, the latest SBI shows sole traders continuing to struggle disproportionately when it comes to accessing external finance. Just 7% of self-employed respondents applied for credit in Q3, compared to 13% across the small business community as a whole.

While just under six in ten (59%) sole trader applications for finance were approved, seven in ten (70%) were successful across all respondents.

Close to two thirds (65%) of successful self-employed finance applicants were offered a borrowing rate of 6% or more, but this was the case for fewer than half (49%) of all successful small business applicants surveyed.

To reinject optimism into the self-employed community, FSB is calling on all major political parties to commit to:

  • Delaying changes to IR35, or ‘off-payroll working’, rules set to take effect in April which would shift responsibility for determining worker status from contractor to employer, thereby making the hiring of sole traders less appealing.
  • Ruling-out tax rises for the self-employed and freezing fuel duty, the Insurance Premium Tax, and the threshold at which sole traders must register for Value Added Tax (VAT).
  • Bringing the maternity allowance for self-employed mothers in-line with statutory maternity pay and introducing paternity and adoption allowances for sole traders.
  • Ending a £2.5 billion late payment crisis which disproportionately impacts micro-businesses.
  • Overhauling the outdated business rates system, starting with a significant uprating of the £12,000 rateable value ceiling for small business rates relief.

FSB National Chairman Mike Cherry said:

“Our 4.9 million-strong self-employed community has suffered massively as a result of three years of indecision and dithering in Westminster. This election is a chance for politicians to turn the tide, get back to domestic issues and support the sole traders that drive our economy forward.

“Against such an uncertain backdrop, the self-employed certainly don’t need an IR35 rule change that makes hiring contractors less attractive. We’ve already heard noises from big corporates to indicate that – if this change does take effect in April as planned – they’ll pull the plug on sole traders.

“Common sense dictates that a delay to the April roll-out of these rules is now needed.”


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