3 ms·

I'm worried about the impact of this report on self-employed people, as it sounds like it'll be used to increase taxes on them. One piece of tax relief a self-

I'm worried about the impact of this report on self-employed people, as it sounds like it'll be used to increase taxes on them. One piece of tax relief a self-employed person gets is a reduction of their socialised health care tax: National Insurance. If you're self-employed you pay this tax at 9% rather than the 12% that employed people pay. The government that commissioned this report tried to remove this particular bit of tax relief earlier this year, but was stopped as people were really annoyed about it. We have this thing in the UK called 'Zero Hours contracts'. For example, an Uber or Deliveroo driver is on a contract where they can work as many hours as they like. The Uber driver is self-employed, and isn't an employee, so they have to do their own taxes etc. The government claims that A) Zero-hours contracts are being used to provide less stable contracts for the employers benefit, as a zero-hours contract can be ended without notice (this is definitely true, though I'm not sure how many self-employed people are on zero-hours contracts), and B) that self-employment is overly incentivised in the tax system. It sounds like this report will be used to raise taxes on all self-employed people because unscrupulous employers are abusing the tax reliefs. But this will have a detrimental effect on all self-employed people (small business owners, actual freelancers, software engineer contractors).

tiggybear 9y ago
Well what's the justification for the tax break? If it's "well, self-employed people are important so we should just throw money at them" then that's not a very good reason. Why not have them pay 0 taxes? While I'm personally for single-payer healthcare, I don't see why going off on your own means you should get to pay less in taxes than someone who has to work under a boss. Does it incentivize economic growth? You're not hiring anyone...
- BillFranklin 9y ago
  That's a good question. Sorry that I didn't answer it in my original comment. Self-employment comes with personal financial risk, but the reason for their lower national insurance contributions (NIC) is to do with pensions. The UK chancellor this year: > Historically, the differences in NICs between those in employment and the self-employed reflected differences in state pensions and contributory welfare benefits. Self-employed people are more unlikely to have a pension, and the state pension is about £7,000 per year. In contrast to this, people who are employed have access to a workplace pension, where an employer must contribute to the employee's pension. The average teacher will have a workplace pension of £25,000 per year. So, the idea behind the reduced NIC for self-employed people is that they'll put the money into their savings / personal pension. If you're self-employed and adding 3% of your income into your pension each year, then the 3% savings on NIC would be the government enabling you (as your own employer) to 'match' your own annual pension contribution.
- IanCal 9y ago
  You don't get covered for some of the same things, I think that might be it. Statutory sick pay, for example.

tiggybear 9y ago

Well what's the justification for the tax break? If it's "well, self-employed people are important so we should just throw money at them" then that's not a very good reason. Why not have them pay 0 taxes? While I'm personally for single-payer healthcare, I don't see why going off on your own means you should get to pay less in taxes than someone who has to work under a boss. Does it incentivize economic growth? You're not hiring anyone...

BillFranklin 9y ago
That's a good question. Sorry that I didn't answer it in my original comment. Self-employment comes with personal financial risk, but the reason for their lower national insurance contributions (NIC) is to do with pensions. The UK chancellor this year: > Historically, the differences in NICs between those in employment and the self-employed reflected differences in state pensions and contributory welfare benefits. Self-employed people are more unlikely to have a pension, and the state pension is about £7,000 per year. In contrast to this, people who are employed have access to a workplace pension, where an employer must contribute to the employee's pension. The average teacher will have a workplace pension of £25,000 per year. So, the idea behind the reduced NIC for self-employed people is that they'll put the money into their savings / personal pension. If you're self-employed and adding 3% of your income into your pension each year, then the 3% savings on NIC would be the government enabling you (as your own employer) to 'match' your own annual pension contribution.
IanCal 9y ago
You don't get covered for some of the same things, I think that might be it. Statutory sick pay, for example.