Staff working through online platforms – such as Deliveroo riders and Uber drivers who receive work through an online app – could be provided with a simple way of paying the correct tax through a Pay As You Earn (PAYE) platform.
The Office for Tax Simplification (OTS) has released its paper, Platforms, the Platform Economy and Tax Simplification, which suggests how to simplify and improve the tax experience of those who work on a self-employed basis through online platforms.
Paul Morton, OTS Tax Director, explained that there is growing concern around the tax implications of the gig economy and that the experience of individual taxpayers should be simplified.
This latest paper suggests that online platforms could operate a system equivalent to PAYE, deducting tax from earnings and removing the responsibility for fulfilling tax obligations from the worker.
“This does not change the employment status of the platform worker,” said Morton. “The idea of ‘PAYE for platforms’, which so far as we know has not been suggested before, would be optional.
“However, for those who chose it, it would remove the administrative burden from these individuals, who 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.”
The proposed system would have nothing to do with employment status and would merely by a tax collection mechanism. The paper concludes that the government should consider the case for such a PAYE platform system.
The paper also proposed that HMRC continues its work to develop guidance for these workers, that it engages with technology developers to provide reassurance that self-employed digital applications are fit for purpose, and to consider establishing an app for the self-employed to help them manage their tax affairs.
