The UK’s employment and tax rules no-longer work and they increasingly sit at odds with our diverse and flexible labour market.
The consequences are severe:
- Many workers miss out on rights and benefits: our research finds that self-employed individuals are half as likely as employees to receive training, less able to build up retirement savings and less likely to take time off sick. At the same time a significant minority of self-employed workers do not enjoy high levels of autonomy at work – and therefore suffer the downsides of fewer protections, rights and benefits but without greater freedom at work.
- The rules result in a poor deal for the taxpayer. The Treasury misses out on over £5bn of foregone revenue through different NICs rates for the self-employed, as well as other potential revenues.
- Uncertainty about employment status drives inefficiency in the market: injecting costs, whilst providing an opportunity for unscrupulous firms to take a risky approach to compliance thus earning a competitive advantage over compliant firms.
There is now cross-party consensus that such problems must be addressed, although there has been little agreement on how. Our proposed new rules make life fairer for the individual and the taxpayer, whilst providing greater certainty and simplicity to businesses. This report envisages a future where no matter how the work is performed there is greater evenness in tax treatment and in associated rights. As far as possible, we should be moving towards one form of employment.