Tax & admin · 14 September 2017

Gig economy workers urged to register with HMRC before self-assessment deadline

Even people picking up irregular work from companies like Uber need to notify HMRC
Even people picking up irregular work from companies like Uber need to notify HMRC

Self-employed workers in Britain’s so-called “gig economy” have been advised by a lobby group to register with HMRC before the imminent self-assessment deadline for the previous tax year.

The Low Incomes Tax Reform Group (LITRG), a charity that lobbies HMRC on tax policy, has reminded all self-employed workers operating through platforms such as Uber or TaskRabbit, who may have not previously submitted yearly tax returns to HMRC, that the deadline to register for self-assessment is 5 October 2017.

By law, all self-employed people with as-yet undeclared earnings since the start of this tax year – 6 April 2016 – must notify HMRC of all new sources of income, so they can be taxed under self-assessment and assessed for any National Insurance contributions (NICs) they may owe.

The push from LITRG to flag the responsibilities of gig workers was out of concern that the often irregular nature of gig work means it “may not occur” to people that their earnings are taxable. Even if earnings from the 2016/17 tax year year fall beneath the entry threshold, failure to provide any submission can lead to financial penalties.

The group raised specific concerns over the possibility of “miscellaneous” income, i.e. through one-off or very casual jobs, when work does not fall into the category of employment or self-employment. HMRC still requires income submissions for such instances.

Workers with miscellaneous income do not pay Class 2 NICs, which give access to the benefits system. LITRG advised gig workers to consider the cost of voluntary Class 3 NICs before paying in to the lower bracket.

Commenting on the rapid shift in the workforce through on-demand working apps, LITRG chair Anne Fairpo reminded workers that the rules of the game remained the same.

“Behind the innovative technology and new language surrounding the ‘gig economy’ lies an old-fashioned taxable source of income,” she said in a statement.

“If a person’s activity is regular, organised and is done with a view to generating a profit, then this will put them within the realms of self-employment and the UK’s complex self-assessment tax return system.

“There is a real risk of penalties for failure to notify HMRC, which are based on the tax that could potentially be lost as a result of the failure to notify on time. Where the 5 October deadline is missed, a person should still register as soon as they find out they should. As long as a tax return is submitted and any tax due is paid on time (normally by the following 31 January), there will be no potential lost tax revenue and thus no penalty to pay.”

Revealed: HMRC’s ten most ridiculous self-assessment tax expense claims

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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