Government to launch Employment Status Review by end of 2025
The UK Government has confirmed plans to launch a consultation on employment status by the end of 2025. This move could bring significant changes for millions of freelancers, contractors and sole traders across Britain.
The consultation aims to simplify the complex rules around whether self-employed workers are genuinely independent. Or whether they should be on their client’s payroll instead.
Getting this decision wrong can cost “millions of pounds” in tax liability, according to contractor insurer Qdos.
What’s the timeline for the consultation?
In July, Lord Hunt of Wirral made a key announcement in Parliament. He said:
The Government are committed to consult on tackling the pressing issues with the existing framework for employment status. We have not given a specific timetable for this consultation so far because we know that the issue is important and complex. We are keen to allow enough time to shape it in the right way.
He added: “I am pleased to be able to confirm to your Lordships’ House that we will publish our consultation on employment status by the end of this year.”
The consultation will look at ways to make employment status clearer. It will help both self-employed workers and the businesses that hire them. The Government will also explore new protections for independent workers.
Industry experts welcome the news
Seb Maley is CEO of employment status specialist Qdos. He said the announcement is a positive step forward.
“This has flown under the radar a little. But it has the potential to be a big step in the right direction. This matters for millions of self-employed workers and the businesses engaging them,” he said.
Maley highlighted the current problems: “Employment status is a minefield. The complexity of determining if someone is self-employed or employed means status can be misinterpreted, misunderstood and misapplied.”
He pointed to high-profile cases involving freelancers and contractors. These cases have involved millions of pounds in tax liability.
What changes are needed?
Maley believes simplifying employment status should be the top priority. He wants both employment law and tax status considered together.
“The millions of people who want to work for themselves should continue doing so. They shouldn’t be restricted by needless red tape and regulation,” he said.
Biggest employment status shake-up in decades
Rebecca Seeley Harris from RE: Legal Consulting called it “the biggest shake-up in employment status in decades.”
She noted other major changes happening at the same time. These include changes to tax liability for umbrella companies. There’s also an upcoming consultation on conduct regulations for employment agencies.
“These will make significant changes to the labour supply chain,” she explained.
Tackling false self-employment
Seeley Harris wants the consultation to protect genuinely self-employed workers. But she also wants fair working practices.
“False self-employment has been a big problem, especially in the gig economy. Hopefully, this consultation will solve that for both tax and employment rights purposes,” she said.
