Freelancers caught in tax crossfire
Self-employed IT consultants, project managers and other freelancers are finding themselves caught up in a government crackdown on “disguised employment” in the public sector. HMRC says many contractors who set themselves up in business through “personal service companies” and sell their services to the public sector should be considered employees and on the payroll of the councils and NHS trusts where they work. Since April, the burden has shifted onto public sector bodies to identify who their contracted staff really work for, and the change has added 90,000 people to the public payroll, raising an extra £265m in tax this year. However, many individuals claim they are being incorrectly reclassified as employees, with the Association of Independent Professionals and the Self-Employed warning that thousands of legitimate freelancers are being driven on to the public sector payroll. Experts say the issue is set to become more complex, after last month"s Budget announced a consultation on extending the reforms to contractors in the private sector.
Source: The Sunday Times (17/12/2017)