Give one-person firms pension auto-enrolment, say MPs

People who work for themselves should get pension auto-enrolment to help them save for retirement, an influential panel of MPs has declared.

But it is currently "not clear that the government has a clear strategy or timetable for doing so," said the Treasury Select Committee after probing how to help hard-pressed households.

So the need for the government to explore using self-assessment and NICs to auto-enrol the self-employed into the system is "urgent", the committee said.

"The Treasury should keep an open mind towards doing so [adding the self-employed to the auto-enrolment system]," the MPs also wrote in their unanimously agreed report.

They added: "The possibility should be analysed as part of the next automatic enrolment review."

Policy wonks have previously recommended bringing the self-employed into auto-enrolment, under which a percentage of a worker's pay is automatically put into a pension on their payday.

Although the self-employed not having an employer was then considered a practical barrier, the MPs have now heard suggestions that a tax return could be used as the mechanism to put away up to 5% of self-employed earnings -- assuming the taxpayer gives their permission.

The MPs also heard that excluding independent workers from auto-enrolment has “exacerbated the incentives for employers to create pseudo-self-employment roles, without the degree of autonomy normally associated with self-employment, in order to benefit from lower taxes.”

Profile picture for user Simon Moore

Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
Printer Friendly, PDF & Email

Sign up to our Weekly Newsletter

Keep up to date with everything in the world of contracting.


Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question