UK employers using self employment laws to avoid tax, says report

Employers are using avoiding self employment laws to avoid paying tax and give workers more rights, according to two reports released on Tuesday.

Matthew Taylor, appointed by the government to lead an inquiry into how people work, said some employers were using “gig workers”, such as cab drivers, couriers and fast food delivery people, to avoid paying tax such as national insurance.

"There are reasons why that might be a good thing in terms of how those people are working, but it is clear to a certain extent what is actually going on is, people are creating forms of work for themselves, or businesses are creating forms of work, to try to avoid tax,” told the BBC.

In a separate report, the Trades Union Congress (TUC) said the increase of "insecure work" could be hitting the Treasury to the tune of £4bn a year.

“The rise in low paid self-employment accounts for just over half (£2.1bn) of this bill, with the government collecting billions less in income tax and National Insurance contributions,” the TUC said.

The surge in zero-hours working had left an additional £1.9bn hole in the public finances, it added.

TUC General Secretary Frances O’Grady said the rise in insecure work was “punching a massive hole in the public finances” too.

“Zero-hours contracts and low-paid self-employment are costing the economy billions every year in lost tax revenues. That’s money that could be spent on stopping the crisis in our schools and hospitals and making sure every elderly person gets decent care,” she said.

“Bosses who employ staff on shady contracts are cheating all of us. That’s why we desperately need more decent jobs that pay a fair wage.”

“Getting more people into unions is key. Workers in unionised workplaces are twice as likely to be on better-paid secure contracts.”