The 'Gig Economy' has been the focus of much press attention in recent months and many Government sponsored reviews in to this area have begun.
At the Autumn Statement, the OBR estimated that the 'Gig Economy' will cost the Treasury £3.5bn in 2020/21 in lost tax revenues. With that in mind, the way individuals work and how this work is taxed is becoming an increasingly important topic.
There have been many reviews announced in to this sector of late so we have provided a summary of them below:
- The Treasury Committee has called for evidence and views on the shrinking tax base. Specifically they have asked for views on multi-jobbing and different ways of working. This can be found here;
- The Taylor Review was launched in November 2016 under the instruction of the Prime Minister. This will look at modern employment practices and is being undertaken by the Royal Society of the Arts;
- The Business, Energy and Industrial Strategy (BEIS) Committee launched an inquiry in to the future world of work focussing on the status and rights of workers operating in the 'Gig Economy'. This can be found here; and,
- The Work and Pensions Committee has also started their own review to consider how the welfare system can support self-employed gig workers. This can be found here.
- A Cross-Government Working Group on Employment Status is also considering the potential to move to a more uniform set of tests on employment status across tax, employment rights and the welfare and social security system.
All of the reviews above are being undertaken at the same time as:
- A focus paper from the OTS which looks at the tax issues that arise as a result of the growth of the 'Gig Economy';
- The wide ranging press coverage of the Uber judgment and further comments on other high profile operators in this market; and,
- HMRC has also set up a specialist employment status and intermediaries team with a remit to take "all necessary steps" to ensure that employers are paying the correct amount of tax and NIC and engaging workers correctly. This move is intended to clamp down on those employers and organisations operating in the 'gig economy' who may have incorrectly classified workers as self-employed.
It is clear that this topic will just increase in importance as we move in to 2017.
In light of the above and the potentially wide ranging challenges posed to businesses, KPMG's multi-disciplinary team of Employment Law, Tax and Reward practitioners are ready to discuss this matter further and provide practical insights as to how to move forward. Please get in touch with your normal contact or alternatively email firstname.lastname@example.org for further details.