The Office for Tax Simplification (OTS) has today published new details on its plan to simplify how ‘gig economy’ workers pay tax on their earnings.
It is the office’s third paper on the so-called ‘platform economy’ and tax in which it suggests how to simplify and improve the “tax experience” of the increasing number of individuals who work on a self-employed basis through online-based employment.
Under its suggested proposals, online employers, such as Uber and Deliveroo, could be forced to operate a system equivalent to PAYE for self-employed workers, effectively taxing the worker at source.
The OTS says this change would not affect the worker’s employment status, but could help those workers who are unaware of their tax obligations, namely sending a tax return and paying a large sum at the end of each financial year.
Paul Morton, OTS Tax Director, said a PAYE-like platform would also remove the administrative burden from gig economy workers.
“[Gig economy workers] can be some of the most vulnerable in the labour market and mean that they should not get an unexpected tax demand at the end of the year. It would also make tax collection more efficient,” he said.
Mr Morton added that his office is keen on implementing new technology which would help individuals pay tax and keep on top of their obligations as a self-employed trader.
“On new technology, we believe HMRC has a critical role in ensuring software applications designed for the self-employed to manage their tax affairs are fit for purpose and they also consider establishing a digital tax app to simplify how people interact with them,” he said.
The OTS said it is now up to HMRC to consider its proposals.