Employed? Self-employed? Worker or Dependent Contractor? The world of work has become far more complex in recent years with changes in the way people want to work and can work. This has led to concerns that the regulations, including tax rules, may no longer be as effective.
In July 2017, the Taylor review has reported on modern working practices in the United Kingdom and identified 7 steps towards fair and decent work with realistic scope for development and fulfilment.
The review comments that the far lower National Insurance Contributions (NIC) levels for self-employed compared with employees is “not justified or sustainable”. Similarly the review recommends change to the tax system to rebalance the tax position which currently imposes an additional charge on employed labour that is not charged on self-employed labour. It is probably safe to assume that any alignment will be to increase the tax burden on the self-employed rather than a reduction for the employed.
We have already seen new legislation making persons within IR35 working on engagements within the public sector taxed as employees from 6 April 2017. The Taylor review appears to be pressing for further moves to make the taxation of the self-employed closer to that of employees.
The attempt to increase the NIC rate for the self-employed announced in the Spring Budget 2017 was dropped but it is possible that NIC are revisited by the current government. The review also recommends that the definition of employees, dependent contractors and self-employed are clarified and this could lead to people currently defined as self-employed and taxed accordingly finding that they are dealt with differently in future.
If you are changing the way you work, moving to self-employment or setting up a personal service company, or if you are an employer using contractors, it is important you understand the rights, responsibilities and obligations which apply in the modern workplace and how they affect you.
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