Uber Drivers are Workers for Employment Law Purposes – but not necessarily for Tax

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The Supreme Courts’ decision that Uber drivers should be regarded as workers for employment purposes will not automatically alter their tax position, say leading tax and advisory firm Blick Rothenberg.

Robert Salter a tax Director at the firm said: “Whilst the Supreme have confirmed that Uber drivers should be regarded as workers for employment law purposes – hence entitling them to things such as holiday pay, employer pension contributions and the national minimum wage, it will not automatically alter their tax position.”

He added: “ Uber drivers have historically been regarded as self-employed and there is nothing in the labour law ruling which would automatically undermine this self-employed status for tax purposes.

“ This is because whilst labour law has three separate statuses for ‘workers’ – that is regular employees, workers (in simple terms, an intermediate status between employed and self-employed) and self-employed – tax law only has two separate options – employees or the self-employed.”

Robert said: “this means that it is therefore quite possible for someone who is a worker for labour law purposes – and gets the benefits of this status – e.g., employer pension contributions and a minimum wage – to also simultaneously be entitled to the benefits of self-employment from a tax perspective. This can, for example, include more tax deductions and a lower rate of NIC.”

He added: “ The tax treatment of workers and the fact that they have potentially been able to – in some cases at least – have the perks of employee / worker status and the lower taxes associated with self-employment – is a question that the Government should now pro-actively address.”

Robert said: “ While there have been previous labour law rulings in this area and the Taylor review into the Gig economy and how this should be ‘managed’ from a wider perspective, there has been no formal changes from an HMRC or Government perspective.”

He added “ With the Government needing to find additional revenue to cover the costs of Covid support, there now needs to be urgent changes which should be addressed in March’s budget.”