In response to a government call for evidence, the Low Incomes Tax Reform Group (LITRG) have pointed out a number of flaws in how individuals working in the gig and sharing economies are taxed. Currently, they are expected to fit within the Self Assessment tax system, i.e. be responsible for declaring their taxable income annually and paying HMRC accordingly. However, these workers may not realise they need to register for income tax in the first place, given the irregular and often ‘on demand’ nature of the income. This can result in penalties for non-compliance.
HMRC have a clear responsibility to advise and educate users of online platforms in the gig and sharing economies regarding their tax responsibilities. LITRG make some key recommendations including:
- They need to develop better, tailored guidance for the sharing and gig economies – current guidance is aimed at traditional self-employment, and many gig workers might struggle to
understand and apply this to their situation;
- HMRC could develop a checklist of issues that first-time participants in gig economy work should be aware of;
- The search facility on GOV.UK could be configured to recognise the names of some of the more common platforms e.g. eBay, Uber, Airbnb, directing an individual using those terms in a search to an appropriate tax guidance page;
- HMRC could set up a specific gig helpline and web chat so that taxpayers who attempt to reach HMRC with questions can have a productive conversation with someone about their tax issue;
- HMRC could try and be more creative e.g. by making some webinars or YouTube videos that online platforms could link to, that help people engage with their taxes.
There is a longstanding question as to whether workers in the gig economy are truly self-employed or whether they are the employees of the platforms they work for. There are tax implications arising from the employment status of these workers, and it is clear that urgent clarification is needed – the issue has been allowed to rumble on for far too long.