News and events

News

How the gig economy finally went into retreat

A loophole that many self-employed people have used to avoid paying income tax and national insurance in the UK has closed.

After a yearlong delay, the IR35 regulation came into force on April 6. It gives larger companies the responsibility for deciding contractors’ employment status, with a view to ensuring they pay the taxes that they are supposed to.

This will reduce the leeway thousands of voluntarily self-employed workers have to avoid tax payments and social contributions. It also makes it harder for companies to avoid taking proper responsibility for these people by denying them employment rights and benefits such as pensions or holiday entitlements, while avoiding the considerable expense of paying employers’ national insurance for them.

The change in the rules for the voluntarily self-employed is mirrored by exactly the same trend regarding the involuntarily self-employed that saw investors criticising Deliveroo’s employment model ahead of its disappointing IPO, and the UK’s supreme court ruling against Uber. The dominant liberal interpretation of the relationship between employers and their workers is becoming less and less acceptable within society. And it raises profound questions about the future of liberal capitalism.

The loophole closes

The new IR35 regulation changes the rules around what is known as off-payroll working for private companies. It puts an end to workers who are really employees voluntarily working as self-employed by establishing their own intermediary company.

Many workers take advantage of the rules to pay themselves very low salaries through these companies and pay most of their income as dividends, meaning they paid far less tax on their take-home pay.

Cont…

To read the full article by Dr Gerhard Schnyder and Dr Luda Svystunova visit the Conversation.

ENDS

 

Notes for editors

Press release reference number: 21/50

Loughborough is one of the country’s leading universities, with an international reputation for research that matters, excellence in teaching, strong links with industry, and unrivalled achievement in sport and its underpinning academic disciplines.

It has been awarded five stars in the independent QS Stars university rating scheme, named the best university in the world for sports-related subjects in the 2020 QS World University Rankings and University of the Year by The Times and Sunday Times University Guide 2019.

Loughborough is in the top 10 of every national league table, being ranked 7th in the Guardian University League Table 2021, 5th in the Times and Sunday Times Good University Guide 2020 and 6th in The UK Complete University Guide 2021.

Loughborough is consistently ranked in the top twenty of UK universities in the Times Higher Education’s ‘table of tables’ and is in the top 10 in England for research intensity. In recognition of its contribution to the sector, Loughborough has been awarded seven Queen's Anniversary Prizes.

The Loughborough University London campus is based on the Queen Elizabeth Olympic Park and offers postgraduate and executive-level education, as well as research and enterprise opportunities. It is home to influential thought leaders, pioneering researchers and creative innovators who provide students with the highest quality of teaching and the very latest in modern thinking.

Categories