‘More progress needed on gig economy tax concerns’

Gig Economy


Faster progress, more urgency and practical policy solutions are needed to address the pressing tax challenges posed by the gig economy, according to an All-Party Parliamentary Group on Responsible Tax.

It is estimated that there are now more than a million workers in the UK’s gig economy and that number is rising. The APPG report says this has brought new, flexible employment for workers in the UK as well as innovative services and products for consumers. However, it poses challenges with regard to National Insurance Contributions (NICs) and “bogus” or “sham” self-employment as well as VAT and corporation tax.

The report recognises the Chancellor’s attempts to raise the rate of NICs paid by employees from 9% to 11% last year, as well as the more recent consultation about the ways online platforms can help their users to pay the right amount of tax. However, it says little progress has been made.

The report recommends that the difference between the definition of “worker” for employment purposes and the definition of “employee” for tax purposes should end and that the Government should narrow the gap between NICs paid by employees and NICs paid by the self-employed.

It also calls on the Government to rigorously enforce existing law to avoid abuse of self-employment tax benefits, to clarify urgently the employment status of gig workers and to provide more information to those operating in the gig economy.

In addition it wants the Government to press for further international action to fairly tax revenue earned in the gig economy, as well as acting more assertively in finding UK-based solutions.

This week has seen two major legal cases relating to gig economy workers. Earlier this week, a group of Hermes couriers won their fight to be treated as workers rather than independent contractors, meaning they were entitled to the minimum wage and holiday pay among other rights.  And yesterday a group of 50 Deliveroo couriers secured a six-figure settlement following an employment rights claim. The riders argued that they had been unlawfully denied rights after being labelled self-employed contractors. Deliveroo reached a settlement with the riders, without admitting liability.

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