Employment: Taxation

(asked on 3rd February 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether the review of changes to off-payroll working rules will recognise that freelance contractors are not employees.


Answered by
Jesse Norman Portrait
Jesse Norman
This question was answered on 6th February 2020

The off-payroll working rules are designed to ensure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as other employees. Employment status is not a matter of choice but depends on the facts and actual working practices of an engagement.

From April 2020, following the roll-out of the reforms to the off-payroll working rules to large and medium sized organisations in all sectors, clients will be required to assess a contractor’s employment status and determine whether they fall within the scope of the rules. HMRC's Check Employment Status for Tax (CEST) digital service was developed in conjunction with tax specialists, contractors and other stakeholders, and is available to help organisations apply the off-payroll working rules correctly.

The Tax Information and Impact Note (TIIN) published in July 2019 sets out HMRC’s assessment that the reform to the off-payroll working rules is expected to raise around £3 billion by 2024, and is not expected to have any significant macro-economic impacts. The TIIN can be found here: https://bit.ly/2YTbOaA. Furthermore, independent research conducted by IFF Research and Frontier Economics following the implementation of the 2017 public sector reform showed the reform had not resulted in significant disruption to the sector, or to its use of contingent labour.

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