TAXING MATTERS
What is the impact on the gig economy or ridesharing platforms?
More admin: platforms must collect and report income data to HMRC. This includes setting up systems to record and transmit this information.
More accountability: platforms are responsible for the tax ‘compliance.’ Failure to report income details accurately can result in penalties, forcing platforms to put proper reporting systems in place.
Increased education and training for their drivers: in response to the legislation, platforms are implementing measures to educate and support their drivers in meeting their tax obligations.
What does this mean for traditional private hire and taxi operators and fleets?
• The definition of a digital platform has yet to be made clear to us in the ground transport industry.
• One thing to understand is that operators and despatch software are not necessarily included in the legislation.
• The HMRC has stated that it is ‘already working’ with the relevant platforms. That means that if you haven’t heard from them, your business may not be covered under the ‘platform.’
• In April 2022, we saw the introduction of conditionality Tax Checks. This made every driver and operator obligated to declare their tax status. So, there are rules already in place.
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• Most of the platforms covered by the new legislation are open marketplaces that match sellers to buyers. Examples are
Booking.com, eBay, Etsy as well as ridesharing apps such Uber, Bolt, OLA and Freenow.
• Private hire tech exists in a different space because it pairs operators with drivers, who are already regulated through their relationship with the licensing authority.
CONCLUSION
The HMRC reporting legislation may represent a significant change for app drivers. However, HMRC insists that: “It brings greater transparency and clarity to the tax obligations of individual drivers while placing additional responsibilities on gig economy platforms.”
However, if you are an operator and if the HMRC has not approached you to sort out your reporting, the chances are you are not affected by it.
That means that if you are a driver working for a traditional style operator, you are also not affected by the new legislation.
I’ve heard of reports of operators gathering National Insurance numbers and drivers getting worried. My message is that you can rest easy for now.
If you have any questions or are worried about your situation, please do not hesitate to contact me.
Before, it was easier for workers to earn money under the table. Now, because platform app companies must share earnings information with HMRC, it is harder for drivers to avoid paying the exact correct amount of tax.
PHTM FEBRUARY 2024
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