‘Gig economy’ workers who started trading in the 2017–18 tax year have just weeks left to register for self-assessment with HMRC. LITRG is concerned that because of the irregular and ‘on demand’ nature of their activities, ‘gig economy’ workers may not realise that they are generating taxable income. They may also be unaware that even where the level of income means that there will be no tax or National Insurance due, a tax return may still be required.
LITRG’s new ‘Tax if you work in the gig economy’ factsheet offers guidance tailored to those working in the ‘gig economy’ about their tax and employment law status, including on registering for self-assessment. It also covers a wide range of other issues on which workers are likely to have questions including:
- What to do about one-off or very casual jobs
- Deductible expenses
- The new trading allowance
- Your tax credits/universal credit position
- National Insurance contributions (NICs)
The ‘gig economy’ includes people who earn extra cash by using one of the many available online platforms to, for example, offer rides, run errands and make deliveries.
The publication of the factsheet was prompted by recent HMRC research suggesting that many people (54 per cent) who have earned income from the sharing economy (which includes those working in the ‘gig economy’) do not realise it is taxable.
Chair of LITRG Anne Fairpo said:
“HMRC’s finding, although worrying, is unsurprising. Given the irregular and often ‘on demand’ nature of ‘gig economy’ income, in many cases it does not even occur to many people that their income is taxable, let alone what their obligations are in respect of it.
“This is down to an overall lack of tax antennae and the fact that HMRC do not really provide those in the ‘gig economy’ with any tailored information that they can use and apply to their own situation. Indeed, the GOV.UK page on selling services online currently gives the impression that it is only necessary to file a tax return if one needs to pay income tax, i.e. if total income is more than the personal allowance and any other reliefs for which one is eligible. In fact, anyone who is self-employed with income above the £1,000 trading allowance needs to complete a tax return and is obliged to tell HMRC so that a self-assessment record can be set up. Anyone who relies on this GOV.UK page and neglects to complete a tax return risks being unintentionally non-compliant.
“While there has recently been a consultation looking at what more can be done to ensure tax compliance by users of online platforms, it is clear that people need help to inform, navigate and protect themselves right now and we hope that this factsheet will go some way to helping them.”
The factsheet 'Tax if you work in the gig economy’ can be found on LITRG’s website.More Articles by Chartered Institute of Taxation (CIOT) ...