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OTS suggests PAYE equivalent for online platform workers

printer Mail

In its latest paper on the platform, or ‘gig’, economy, the Office of Tax Simplification (OTS) has introduced the idea of ‘PAYE for platforms’, through which online platforms such as taxi or delivery firms might operate a system administratively equivalent to PAYE for self-employed platform workers, but which would not affect their employment status.

The new paper, Platforms, the platform economy and tax simplification (see, is the OTS’s third on the ‘gig’ economy, looking at how to simplify the tax experience of the increasing number of individuals who work on a self-employed basis through online platforms.

The OTS puts the case for enabling online platforms to operate a system equivalent to PAYE for self-employed platform workers. Such an arrangement, which the OTS says would ‘look and feel’ more similar to that of an employee from an administrative point of view, might prevent quite large numbers of individuals having to submit self-assessment tax returns and a computation of their self-employment income.

Paul Morton, OTS tax director, said: ‘This does not change the employment status of the platform worker. 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 paper does not consider the current legal challenges being heard regarding the employment status of platform workers.

The OTS would like to see HMRC engage fully with technology developers and suggests HMRC might consider creating an app for the self-employed to help them manage their tax affairs.

HMRC published a call for evidence alongside the 2018 Spring statement seeking views on the role platforms should play in ensuring that users comply with their tax obligations. The OTS sees improved HMRC guidance as having ‘a critical role’ to play in ensuring the success of such government initiatives by helping platform workers who are genuinely self-employed understand their tax obligations. The new OTS paper does not cover those who sell/buy goods or rent out spare rooms through platforms, although these were included in HMRC’s call for evidence.

The OTS published its first paper on the ‘gig’ economy in December 2016, followed by an updated paper in July 2017.

The OTS has also published its annual report for 2017/18. Besides reviewing its work over the past year, the report looks forward to its current work programme, including:

  • the review of IHT, on which it intends to report in the Autumn;
  • a project on HMRC guidance, also to report in the Autumn;
  • developing and expanding on key areas highlighted in the business lifecycle review, on which it will publish a scoping document shortly;
  • personal tax issues; and
  • considering of the role and impact of technological changes.

The OTS annual report 2017/18 is available at