Budget 2017: Uber & Deliveroo Drivers Get A Tax Hike, Their Employers Still Get A Tax Cut

By James O Malley on at

The Chancellor, Phillip Hammond has today announced a hike in National Insurance Contributions (NICs) for self-employed people - something that will hit people who work in the "gig economy" the hardest. This means that people who work for companies like Uber, Deliveroo, Task Rabbit and Gett, as well as some delivery companies like Amazon and Yodel, could be hit hardest by the changes. Even worse - as we admit we might be a little biased here - freelance journalists will also be affected.

Last year the government announced that it is scrapping "Class 2" NICs - a flat rate contribution and today it was announced that it is "Class 4" contributions - will be increased from 9% to 10% in April 2018 - and then to 11% in April 2019. The Budget report notes that "Taken together with the abolition of Class 2 NICs, this means that only self-employed individuals with profits above £16,250 will have to pay more NICs."

According to this an Uber driver can expect to earn around £23,000 a year - so many will definitely be hit by the changes.

The thinking appears to be to remove a differential in tax paid towards state pensions by employees and self-employed workers. And it arguably makes sense when viewed from a zoomed out perspective: The number of people who are self-employed has sky-rocketed in recent years in part due to the gig economy - and the government still wants people to be paying in. But it does also mean that the workers with the fewest employment rights and protections are paying even more for the privilege.

Related to this, the government is also cutting the dividend allowance, meaning that any sneaky buggers who want to try and use a limited company to get around this loophole will also be out of luck here.

What makes this a bit more classically Tory is that this follows an announcement last year that corporation tax will soon be cut - falling to 19% this year, and 17% by 2020. This means that the corporate masters that control the gig economy will presumably end up paying less.

So next time you get something delivered, or catch a taxi... why not thinking about tipping?