The Treasury recently approved a review of UK employment status by the Office of Tax Simplification (OTS). Evaluating the difference between employment and self-employment, the review will also be open for contractors and similar parties to express their views, Contractor UK reported.
The OTS will assess whether the UK’s existing employment status checks cause “real uncertainty” – and if so, in which areas and departments of the workforce.
In addition to this, the review will explore the divisions within the labour market where it is often most difficult to administer tax rules, meaning that existing rules and guidelines will be measured in relation to how they work when an individual has multiple roles.
The decision originated from the office’s assertion that some people can be both employed and self-employed, because the boundary between the two concepts “has not kept pace with changing work patterns”, they stated. Furthermore, there are many cases where an individual works for more than one business, which means that they are technically employed for one position, but self-employed for another.
According to the office, there are “significant tax and NIC differences between employed and self-employed status. Getting the status wrong in a working arrangement can be very costly”.
Employment law trends will also be considered, as will international comparisons and the potential for simplification of the process through a greater use of digitisation.
Perhaps surprisingly, considering its recent attention, IR35 will not be considered under the review, because – according to the OTS – they already scrutinised and made changes to the legislation in 2011.
Final recommendations on the subject will be published in a full report in time for the 2015 Budget.