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Published on 24 February 2017

Further call for evidence for UK tax policy inquiry

LITRG have responded to the Commons Select Committee call for evidence on UK tax policy and in particular on their question ‘How big is the threat to the base for income tax and National Insurance from the changing patterns of working (for example increased levels of multi-jobbing and self-employment and different ways of working, to which the Chancellor referred in his Autumn Statement)?’  

In our response we tell the Select Committee that the queries we see into our website suggest various issues, including: precariously low earnings for workers on zero hour contracts; potential non-compliance in the case of self-employment; and widespread PAYE avoidance behaviour in the agency worker arena. It seems to us that such working arrangements must be impacting on tax and National Insurance receipts.  

We also highlight that very low or irregular earnings patterns year on year could be affecting people’s ability to build a National Insurance record for state pension purposes. Not only does this mean that such workers (and employers) do not pay National Insurance, often earning below the relevant threshold in multiple jobs, it also means that they are also likely to be unwittingly heading towards an uncertain retirement – and one reliant on means tested benefits.

The lack of building entitlement to state pension is further compounded by the same workers falling beneath the threshold for automatic enrolment into workplace pensions, so missing out on employer contributions and failing to amass any private pension. This is a perhaps a more hidden cost of the move towards flexible labour but should be borne in mind when assessing the threat to the tax base.

Our submission can be found here: 

Robin Williamson

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