The government has published its Good work plan, setting out the actions it intends to take in response to the four consultations which followed its conclusions in February on the Taylor review of modern working practices.
The government has published its Good work plan, setting out the actions it intends to take in response to the four consultations which followed its conclusions in February on the Taylor review of modern working practices.
These consultations covered: employment status; agency workers; transparency in the labour market; and enforcement of employment rights.
The plan contains various commitments on employment status and tax, including:
bringing forward detailed proposals on how the employment status frameworks for the purposes of employment rights and tax could be aligned;
legislating to improve the clarity of the employment status tests, which will include the Taylor recommendation that tests for self-employment or worker rights should place more emphasis on control and less on substitution;
legislating to expand the remit of the Employment Agency Standards Inspectorate to cover umbrella companies and take enforcement action where required, working closely with HMRC;
encouraging the broadening of making tax digital;
continuing work on ways to encourage cashless payments, promote compliance among users of online marketplaces and make greater use of ‘conditionality’ in licensed sectors; and
continuing HMRC’s targeting of unpaid internships, while raising awareness among at-risk groups.
The report reiterates the government’s response after Taylor that it has no plans to revisit the disparity in rates of NICs between employees and the self-employed, even though it agrees this is no longer justified by small differences in contributory benefits.
Commenting on the Good work plan, the CIOT has repeated its view that alignment of the frameworks for employment rights and tax will be difficult to achieve while the government refuses to consider action to tackle the NICs issues. John Cullinane, CIOT tax policy director, said that employer’s NICs at 13.8% create ‘a significant incentive for employers to try to engage with people “off-payroll”’.
Cullinane described as ‘laudable’ the government’s intention to legislate for improved clarity on employment status, but added that its approach ‘risks missing the wider point that different statuses apply for employment rights and tax purposes’. The Taylor review recommended retaining the three tiers for employment law: employed, worker, and self-employed (while renaming the worker category ‘dependent contractors’). The tax rules deal only with two categories: employed and self-employed.
The Low incomes tax reform group (LITRG) observed that the plan will not do enough to tackle the issue of ‘false self-employment’. Anne Fairpo, chair of LITRG, described this as ‘where self-employment is foisted upon the low paid or otherwise vulnerable workers in circumstances where it is clearly not correct, in order to drive down the engager’s costs and responsibilities, especially employers’ NICs’.
‘Although the Good Work Plan suggests that legislating to put more onus on control will help cut down the deliberate misclassification of workers, this won’t help in many of the false self-employment cases that LITRG see. Improved HMRC enforcement should be a key element of the plan’, Fairpo added.
The government has published its Good work plan, setting out the actions it intends to take in response to the four consultations which followed its conclusions in February on the Taylor review of modern working practices.
The government has published its Good work plan, setting out the actions it intends to take in response to the four consultations which followed its conclusions in February on the Taylor review of modern working practices.
These consultations covered: employment status; agency workers; transparency in the labour market; and enforcement of employment rights.
The plan contains various commitments on employment status and tax, including:
bringing forward detailed proposals on how the employment status frameworks for the purposes of employment rights and tax could be aligned;
legislating to improve the clarity of the employment status tests, which will include the Taylor recommendation that tests for self-employment or worker rights should place more emphasis on control and less on substitution;
legislating to expand the remit of the Employment Agency Standards Inspectorate to cover umbrella companies and take enforcement action where required, working closely with HMRC;
encouraging the broadening of making tax digital;
continuing work on ways to encourage cashless payments, promote compliance among users of online marketplaces and make greater use of ‘conditionality’ in licensed sectors; and
continuing HMRC’s targeting of unpaid internships, while raising awareness among at-risk groups.
The report reiterates the government’s response after Taylor that it has no plans to revisit the disparity in rates of NICs between employees and the self-employed, even though it agrees this is no longer justified by small differences in contributory benefits.
Commenting on the Good work plan, the CIOT has repeated its view that alignment of the frameworks for employment rights and tax will be difficult to achieve while the government refuses to consider action to tackle the NICs issues. John Cullinane, CIOT tax policy director, said that employer’s NICs at 13.8% create ‘a significant incentive for employers to try to engage with people “off-payroll”’.
Cullinane described as ‘laudable’ the government’s intention to legislate for improved clarity on employment status, but added that its approach ‘risks missing the wider point that different statuses apply for employment rights and tax purposes’. The Taylor review recommended retaining the three tiers for employment law: employed, worker, and self-employed (while renaming the worker category ‘dependent contractors’). The tax rules deal only with two categories: employed and self-employed.
The Low incomes tax reform group (LITRG) observed that the plan will not do enough to tackle the issue of ‘false self-employment’. Anne Fairpo, chair of LITRG, described this as ‘where self-employment is foisted upon the low paid or otherwise vulnerable workers in circumstances where it is clearly not correct, in order to drive down the engager’s costs and responsibilities, especially employers’ NICs’.
‘Although the Good Work Plan suggests that legislating to put more onus on control will help cut down the deliberate misclassification of workers, this won’t help in many of the false self-employment cases that LITRG see. Improved HMRC enforcement should be a key element of the plan’, Fairpo added.
