Dependent Contractors – New Tax Category for Those with just One Client

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Dependent Contractors
Dependent Contractors

Dependent Contractors

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The long awaited Matthew Taylor Report has finally been published. It recommends that some Independent Contractors should now be classified as Dependent Contractors.

According to The Times which saw a copy of the report before it came out “he is expected to call for changes to “minimal and ambiguous” currently legislation to ensure clearer distinctions between employees, the self-employed and workers who rely on one company for their main source of income”.

It seems that Matthew Taylor wants to redefine them in law as Dependent Contractors.

He wants clearer definitions that “better reflects the reality of modern working arrangements”.

High Paid Contractors

Although the national press are all talking about this as something that affects the gig economy and low paid workers, that definition above would bring IT contractors and other high paid contractors into it.

Although there are some IT contractors who have multiple clients, the vast majority work for just one client company at a time.

And there appears to be nothing in the report which says they will treat higher earning contractors differently.

The report, and the press, concentrate on the benefits accruing to low paid workers like pension contributions, holiday pay and sick pay.

However, it would also mean that IT Contractors and others would be taxed as if they are employees of the company.

They would, for all intents and purposes, be temporary employees of the company as opposed to permanent employees.

Matthew Taylor Report Recommendations

Of course, the Government doesn’t have to accept those recommendations.

Contractors groups like IPSE may lobby hard to get higher earning contractors outside of the remit.

However, Matthew Taylor recommends to the Government that they make taxation ‘fairer’ for permanent employees v contractors.

I think we all know what he means by ‘fairer’.

Prime Minister’s View of Contractors

It seems as if Prime Minister Theresa May and Chancellor Hammond are a mind to do this anyway.

Both of them said at budget time that it is not fair that a contractor earning £100,000 a year shoul pay less tax and NI than an employee earning the same amount.

That is not comparing like with like.

However, that is the thinking of the Prime Minister and Chancellor.

Will this go through the Commons?

Well, there may be some backbenchers who oppose this.

However, Labour would go even further than this and would legislate more heavily on the gig economy and abolish umbrella companies completely.

So, they would hardly oppose this.

It looks as if we are in for yet another attack on contractors and their livelihoods.

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