“Self-employment: Who’s dodging the tax?”

Rick at Flip Chart Fairy Tales asks “Who’s dodging the tax?”

As I understand his post, the answer is – the employers, who can get away with taking on regular staff, but describing them as “self-employed”. That removes the obligation to pay national insurance charges, depriving HMRC of income, and also places the obligation on the worker, to pay their own expenses and “benefits” (such as sick leave).

The proposed changes in NIC did nothing to change that. There is tax avoidance here, but it’s by the employer, not the workers.

It should not be possible for businesses to hire people for what is effectively regular employment, but classify them as self-employed, to avoid paying tax and benefits. What is needed is not changes in tax rates, but tighter control over what constitutes “self-employment”.

Are lots of people going self-employed to avoid tax?

That suggestion comes through in the reporting of the widely expected increase in national insurance for the self-employed. The Independent, for example:

‘dramatic increase’ in number of people registering as self-employed to cut tax bill

And that was the general tone of the chancellor’s speech:

People should have choices about how they work, but those choices should not be driven primarily by differences in tax treatment.

Source: Flip Chart Fairy Tales

(See, for instance this graph in Rick’s post):

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