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HMRC are set to axe a longstanding regulation concerning National Insurance (NI) paid by schools and similar organisations in respect of freelance teachers, lecturers and those in a similar capacity.
Since the 1970s, all instructors have been regarded as employees if they work for educational establishments, even when they are genuinely self-employed with no tax deducted from their fees.
The rule, which meant training centres had to include freelancers on their payrolls, was devised to ensure self-employed teachers in private schools paid enough NI to qualify for the same state pensions as staff members in state establishments.
In a response to the results of a consultation, the Revenue has announced that the requirement no longer meets its original intention, and the current interpretation is causing unnecessary complications for businesses and schools.
The repeal of the regulation, scheduled for 6 April, will mean individuals who are genuinely self-employed will pay tax and NI contributions only on the basis of that status.
Baker Tilly tax partner David Heaton congratulated HMRC on taking ‘a pragmatic view’ and added that the measure could be a pertinent excuse for the taxman ‘to be bold and go for the extra simplification for entertainers, perhaps even extending to office cleaners and the somewhat bizarre rule about telephone kiosk cleaners, who are treated as employees despite their virtual disappearance as a breed’.
