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30th July 2010
Contractors being pushed into PAYE warns FSB
There is growing concern that contractors are being pushed into PAYE status while operating as self-employed.
According to the Federation of Small Business (FSB), contractors are being penalised by the HMRC if they choose to work for other companies.
Given ongoing unemployment in the UK, it is thought that around 300,000 people will choose to become their own boss this year.
National chairman for the FSB, John Walker, said an increase in the number of people becoming self-employed is beneficial as it will reduce unemployment and help to boost the economy.
"However, those who do become self-employed need to beware of the taxman who is penalising these people when they work for other companies, putting them in the PAYE bucket and turning their legal status from self-employed to an employee," he said.
He added that the FSB is urging the HMRC to recognise the status of those opting to work for themselves, and stop attempting to push them "into the PAYE net".
Under current regulations, the HMRC has six months in which to check if a person working in such a way meets all requirements, after which they must be considered self-employed.
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