Uber drivers - employed or self-employed that is the question

06 November 2015

06 November 2015 by MHA MacIntyre Hudson

This is a debate which has been raging for some time and is a sticky question across the globe. Uber connects travellers to drivers through their apps, allowing individuals to book and monitor their taxi’s journey remotely. Not only are the apps quick and easy to use, but reviews boast quicker pick up times and cheaper journey costs.

However, Uber has been marred by controversy since it took to the roads in the UK, with London ‘black cab’ drivers joining European protests about the Uber app running their livelihood. Now Uber drivers have taken to the picket line to fight for the right to be classified as employees, rather than self-employed contractors. The recent rulings against Uber in the US will undoubtedly influence the global debate.

But is Uber just the latest high profile company which has been thrust into the spot light for shedding their identity as employers have been doing for decades - profiting from the work performed by ‘independent contractors’ without the cost, risk or 'aggravation of actually dealing with employees?

Employed or self-employed is an important linchpin as there are significant differences in the tax and National Insurance contributions for both groups. Whether you’re an employee of an organisation, or self-employed, typically depends on the terms and conditions of your working engagement and how this works in practice - your employment status is not a matter of personal choice.

Unfortunately despite many years of trying we presently do not have a magic formula which denotes under tax legislation the distinction between the two; it is therefore based on HMRC practice and Case Law. Ultimately, the responsibility to determine whether someone is employed or self-employed rests with the business that engages the service of the worker.

After consultation by the Office of Tax Simplification we are expecting HM Treasury to come up with a response.  It is expected that HM Treasury in the Autumn statement next week will issue a statutory definition for what is classified a self employed person.

‘Status’ is a complicated and significant issue across many industries - in case of any doubt, it is always best to seek expert advice.

More information on this topic can be found on our website: http://www.macintyrehudson.co.uk/tax/paye-and-ni/employed-or-self-employed

If you have any question, please contact your local office. For further information, please contact Jason Mitchell or your local MHA MacIntyre Hudson tax advisor.

Alternatively, join the conversation at our MHA MacIntyre Hudson Tech Sector LinkedIn Group.