Now that the government have responded, in quite some length, to the 53 recommendations made by the Taylor Review, we thought we’d help by explaining what it actually means for those running a small business.
If you’re employing contractors, that is people who are deemed to be self-employed, you may want to read on. It’s come to a head with the tax status of many people who work in the ‘gig-economy’, where the company deems them to be suppliers rather than employees.
This has its advantages, no employer National Insurance Contributions, no pension, and no wider benefits need to be offered in this situation. The issue lies with, what many people see as, abuse of the system. Basically, if a position looks like employment, smells like employment and takes the time associated with employment, you’re employed.
The Taylor Review suggested that a true third category be introduced beyond employed and self-employed, that of a ‘dependent contractor’.
Now, most professional contractors don’t want rights, they prefer the flexibility that self-employment allows. But it would rectify the issue of IR35 where they have to pay tax as an employee but do not receive the benefits that an employee would get.
To be honest, it’s a lot fairer. But as we know, it’s never simple putting it into practice with tax.
Contact your local AIMS Accountant.