The Nic fallout continues – but is the real issue what is the definition of self employed?

The Nic fallout continues – but is the real issue what is the definition of self employed?

There are many reasons for a Conservative Chancellor not to increase NICs for the self-employed (tax rises could deter enterprise & stifle the entrepreneurial spirit, it goes against Conservative values and belief in a low tax economy – let alone the explicit Manifesto pledge in 2015 not to increase NICs and, practically speaking, there is less financial support in return for NICs paid for the self-employed)

There are reasons to increase NICs – money is needed in the government coffers to pay for social care and the NHS and for education and training, and ensuring self-employed pay more into a system as they now get more from the system in way of tax credits, and going forward they’ll get more in pension support and maybe even maternity and paternity pay.

In addition, the numbers of people now claiming to be self-employed is rapidly increasing. Could this change to the NICs be a way to discourage people becoming self-employed when really there are employed (eg Uber’s drivers, Deliveroo’s agents court cases travelling through the judicial system as I write)?

The Treasury’s thought process could be if there is less appeal to being self-employed then those currently registered as such may refuse to do so in the future, taking away, as we’d say, ‘the pull factor’ for such employment status. These workers would be registered as staff and thus ensuring big companies pay the associated taxes for them and covering the costs of entitlements like holiday pay, pension contributions, sick pay, rather than eschewing them by having them declare themselves as self-employed.

Now I know only too well the difficulties of delivering legislation when there are many moving parts. Many component parts often attracts many opponents too!

So my question to the Treasury and Government is which problem are you really looking to solve? And once you’ve nailed that. are you going about it in the right way? ‘Catch all’ policies seldom do!

At a guess I’d say the big issue could be deterring the ever increasing number of self-employed, where it is questionable they are actually self-employed. This means the company, by not employing them, is doing staff and the government a huge disservice – not paying the right tax and not providing enough support for what should be their employees. It means the self-employed person is not getting enough support from their employer and the company is not paying their fair share into the tax system.

If the government is trying to solve this tricky issue, is it going about it in the right way? Could a clearer neater piece of carefully crafted legislation on the definition of staff and self-employed be a better way forward? I’d suggest it would. Now perhaps they’ve tried and it’s proved incredibly tricky – with quick thinking companies able to bypass the new wording leading to a never ending stream of legislation to keep up. Maybe they concluded therefore that, due to this, the option of making the job less appealing seems the best option. Unfortunately it means such a measure makes all self-employment less appealing, which can’t be right.

Sadly, a ‘catch all’ policy seldom works no matter how noble the motive.

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