National Insurance tax hit for gig economy firms

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Kamal Ahmed

One department is likely to be cheering the publication of the Mathew Taylor review into the new world of work.

The Treasury will be delighted with the recommendations from Mr Taylor, the head of the Royal Society of Arts, on gig economy companies.

He is recommending that firms which have a “controlling and supervisory” relationship with their workers would have to pay a full range of benefits.

That also includes millions of pounds in national insurance contributions.

In an interview with the BBC, Mr Taylor – head of the government’s review into modern employment practices – said that such people were not self-employed as many gig firms insist.

“If you are being controlled and supervised you are probably a worker and you should get workers’ rights and also the employer that employs you should be paying national insurance,” Mr Taylor told me.

‘Control and supervision’

I asked him if such a relationship encompassed firms like Deliveroo and Uber, which say that their riders and drivers are “self-employed” and have full flexibility to work when they want.

“We do not mention individual companies in our report, but I think that if you look at some of the big gig work platforms, at the present time you would say their business models look as though it may be that the people who work for them would be classified as workers rather than as self-employed,” he said.

Mr Taylor said: “If you look at the judgments that the judges have been making [about employment rights in the gig economy], it looks as though the courts are saying that it looks as though somebody is subject to control and supervision they should be described as a worker and not self-employed.

“Which, interestingly, is the same criterion used by the tax authority when they determine whether somebody is self-employed or an employee.

“We think that principle is right.”

Workers” – which Mr Taylor wants to redefine as “dependent contractors” – receive a wider range of benefits and protections compared with “self-employed” people, including sick pay, holiday entitlement and the minimum wage.

Firms which employ them are also obliged to pay national insurance contributions to HM Revenue and Customs at 13.8% of an employees’ earnings above £157 a week.

Although it is difficult to judge the economic value of the gig economy, more than one million people work in the sector.

If large numbers of them are reclassified as “dependent contractors” that could significantly increase taxes paid to the government by gig firms.

 

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