Tax rules for sole traders

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Contractors should not be disadvantaged by the tax system if they stop being a limited company, turn sole trader and want to invest in their professional development.

Sounding this appeal ahead of Autumn Budget 2017, IPSE said it was unfair to give unincorporated freelancers less preferential tax treatment than their incorporated counterparts on training courses.

“If you are self-employed, training outside your profession isn’t tax-deductible as it is for employees,” the Association of Independent Professionals and the Self-Employed said.

“For sole traders, the rules are far less lenient [than they are for limited company contractors] — only training to keep existing skills updated is tax-deductible.”

The association does not believe that precluding sole traders from tax deductibility that they could have if they were incorporated fits with the “UK’s rapidly evolving economy.”

Its submission to Philip Hammond ahead of his statement next month indicates that it also fails to fit with the government’s claims to be championing the smallest businesses.

“The government needs to make training for new skills for the self-employed tax-deductible, as it is for employees,” says IPSE policy officer Imogen Farhan.

Levelling out the playing field will both enable the self-employed to progress in their careers and improve the resilience of the UK economy.

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