Press Release: October 5 deadline warning among advice in urgently needed ‘gig economy’ factsheet
The Low Incomes Tax Reform Group (LITRG) is reminding people who work in the ‘gig economy’ that the 5 October self-assessment registration deadline is approaching fast. The advice is included in LITRG’s new tax factsheet for those working in the growing ‘gig economy’ sector. Its publication comes after worrying HMRC research suggests that many of those working in the ‘gig economy’ may not consider the work they do to be taxable.
‘Gig economy’ workers who started trading in the 2017–18 tax year have just weeks left to register for self-assessment with HMRC. LITRG is concerned that because of the irregular and ‘on demand’ nature of their activities, ‘gig economy’ workers may not realise that they are generating taxable income. They may also be unaware that even where the level of income means that there will be no tax or National Insurance due, a tax return may still be required.1
LITRG’s new ‘Tax if you work in the gig economy’ factsheet offers guidance tailored to those working in the ‘gig economy’ about their tax and employment law status, including on registering for self-assessment. It also covers a wide range of other issues on which workers are likely to have questions including:
- What to do about one-off or very casual jobs
- Deductible expenses
- The new trading allowance
- Your tax credits/universal credit position
- National Insurance contributions (NICs)
The ‘gig economy’ includes people who earn extra cash by using one of the many available online platforms to, for example, offer rides, run errands and make deliveries.
The publication of the factsheet was prompted by recent HMRC research suggesting that many people (54 per cent) who have earned income from the sharing economy (which includes those working in the ‘gig economy’) do not realise it is taxable.
Chair of LITRG Anne Fairpo said:
“HMRC’s finding, although worrying, is unsurprising. Given the irregular and often ‘on demand’ nature of ‘gig economy’ income, in many cases it does not even occur to many people that their income is taxable, let alone what their obligations are in respect of it.
“This is down to an overall lack of tax antennae and the fact that HMRC do not really provide those in the ‘gig economy’ with any tailored information that they can use and apply to their own situation. Indeed, the GOV.UK page on selling services online currently gives the impression that it is only necessary to file a tax return if one needs to pay income tax, i.e. if total income is more than the personal allowance and any other reliefs for which one is eligible. In fact, anyone who is self-employed with income above the £1,000 trading allowance needs to complete a tax return and is obliged to tell HMRC so that a self-assessment record can be set up. Anyone who relies on this GOV.UK page and neglects to complete a tax return risks being unintentionally non-compliant.
“While there has recently been a consultation looking at what more can be done to ensure tax compliance by users of online platforms,2 it is clear that people need help to inform, navigate and protect themselves right now and we hope that this factsheet will go some way to helping them.”
The factsheet 'Tax if you work in the gig economy’ can be found on LITRG’s website.
1 By law, newly self-employed people must notify HMRC by 5 October in the tax year following that in which their activity began or risk a penalty (unless their income from it is fully covered by the £1,000 trading allowance). For example, if Niall begins trading in the tax year 2018/19 (which runs from 6 April 2018 to 5 April 2019), he must tell HMRC by 5 October 2019. The easiest way to do this is to fill in the form CWF1.
If you are already in the self-assessment system, you may still need to tell HMRC about your 'gig economy' income by completing form CWF1 and then including it on your tax return – but, again, see the section on the trading allowance for an exception to this. Where the 5 October deadline is missed, a person should still register, asap. As long as a tax return is submitted and any money due is paid on time (normally by the following 31 January), there should be no potential lost revenue and no penalty to pay
2 To which LITRG responded here: The role of online platforms in ensuring tax compliance by their users