With Labour struggling to give much clarity on whether landlords are workers or not let’s go through what I think is likely.
No. We are not but we also don’t want to be!
So then what do we think is in the mind of Labour? They have spoked about workers for a while now and nobody has really pushed them on what it means.
In 2019 they said only the “super rich” would pay more tax but it turned out that the super rich was anyone with over £80k of income. Not a yacht or lambo in sight at that level of income which is surely a sign of the super rich. So with such a loose grasp of adjectives it will be pretty hard to second guess what a worker is and perhaps thats why Reeves and Starmer are having such a battle to do it.
I think they are committing a category error here. They are trying to describe workers in general English language terms when that isn’t how tax actually works. Tax has many occasions which use words we all think we understand but it doesn’t quite use them in the way normal people would.
Workers for instance doesn’t come up much in tax. It’s only real use is most well known for uber drivers. They are not employed. They are not self-employed. They were deemed to be “workers”. Taxed as self employed but entitled to some of the things employees are.
Labour are possibly talking about workers instead of saying “those in receipt of earned income”. That is employees, self-employed and partners in partnerships. Now a lot of landlords say they are self employed and in partnerships when they really aren’t. They are sole investors and joint investors.
Separately it is worth stating here that HMRC many years ago decided helpfully to let us all know that we should work out our rental profits as if we were in business. Just like the self employed. It didn’t mean however that we were.
If none of this do they mean people that are “busy”? Very unlikely. Tax cases have unhelpfully allowed busy landlords to claim some reliefs for tax purposes that are normally only given to the self employed and partnerships.
So with all this confusion what are Labour going to do? Well probably put taxes up for landlords. It seems the nearest we have to what they mean is those that do not have any assets or investments. That’s not very helpful for landlords of course!
Of course one thing we also seem to know is that employer’s national insurance is going to go up. Paradoxically that will almost certainly affect workers. Businesses have to find a way to pay all costs. They either put prices up or reduce costs. Wages of “workers” are often one the largest costs that a business has so it’s seems pretty obvious that the very people we are being told won’t pay more tax will instead just have less pay going forward. Is that better? Probably not.