Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department plans to bring forward legislative proposals on the employment status of joint or sole directors who receive their income from both dividends and a salary.

An individual’s employment status is determined by the facts and circumstances of the engagement between the worker and engager. This is based on case law.

HMRC takes steps to ensure individuals are correctly treated as employees, or as self-employed, where they should be. HMRC provides extensive guidance to support organisations and individuals understand and determine employment status for tax.

The Government acknowledges that differences in tax treatment between employees, the self-employed and those working through a company structure can lead to individuals paying different amounts of tax while doing very similar work.

Rates of dividend tax are lower than the main rates of income tax, partly to recognise the fact that corporation tax may have been charged on the profits that are then distributed in the form of dividends

The off-payroll working rules, also known as IR35, have been in place for 25 years. They are designed to ensure that individuals working like employees but through their own company, usually a personal service company (PSC), pay broadly the same income tax and National Insurance contributions (NICs) as those who are directly employed.