The Association of Taxation Technicians (ATT) welcomes the announcement in today’s Budget that the Government intends to publish a discussion document on Good Work - the Taylor review of modern working practices.1
Set up to look at how employment law needs to adapt to modern working patterns, the review was prompted by the growth in agency working and the gig economy. While specific tax proposals were outside the scope of the review, it did identify that, while tax law recognises someone as either employed or self-employed, employment law allows for a third category, the worker, who only receives basic employment rights.2
Determining the correct classification between employment and self-employment is not straightforward for either employment or tax law. The review proposed a new category of worker for employment law purposes called the dependent contractor. The dependent contractor would be someone who works flexibly in less formal employment with a more basic package of rights than a normal employee.
Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:
“The ATT welcomes the further contribution to debate in this area, particularly in respect of the difficulties of having two classifications for tax law (employed or self-employed), but three in employment law (which includes ‘worker’).
“However the proposed dependent contractor status, still leaves the tax system trying to fit three into two. The proposed dependent contractor would presumably be taxed as an employee, despite having fewer employment rights. This is likely to create NIC costs for many employers in the gig economy and increase NIC rates paid by workers, which will presumably be unpopular.
“The ATT would like to see a broader discussion here factoring in the wider tax aspects.
“There are lots of other areas that could be usefully brought into discussion to produce a framework for modern working. This could include considering those working via agencies and personal services companies. Any discussion also needs to factor in all other taxes to look at the overall contribution for income tax, NIC and, for those operating via personal service companies, corporation tax.”
Notes for editors
Good Work: The Taylor Review of Modern Working Practices can be found here.
A further article by the ATT on the review can be found here.