Basics of Tax
How businesses take on workers has come under the spotlight, with the government announcing an Employment Practices Review. When companies take on these so called self-employed individuals, they avoid Employer’s National Insurance Contributions and deducting income tax at source, and denies the worker employment benefits such as Statutory Sick Pay, paid holiday and maternity or paternity benefits.
The government are clearly attempting to tackle a sizeable shift in favour of the ‘gig economy’. 9 in 10 new job roles are described as self-employed, and Theresa May supports an estimate that there’re almost half a million wrongly classified working Brits. It will be interesting to see the outcome of the Uber tribunal case.
Provision of a self-employed contract is not enough. It is all about the nature of the relationship.
One of the major tests is if the individual has to perform the work personally or if they can substitute someone else. If they use your tools and equipment and they are subject to your disciplinary rules it is another pointer to employed status. Do they work for someone else and
That is not to deny that there are many cases where truly self-employed freelance contractors and consultants are an asset, but it is necessary to be confident that you are legally compliant.