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In a First, Uber Agrees to Classify British Drivers as ‘Workers’

LONDON — For years, Uber has successfully deployed armies of lawyers and lobbyists around the world to fight attempts to reclassify drivers as company workers entitled to higher wages and benefits rather than lower-cost, self-employed freelancers.

Now the ride-hailing giant is retreating from that hard-line stance in Britain, one of its most important markets, after a major legal defeat.

On Tuesday, Uber said it would reclassify more than 70,000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan. The decision, Uber said, is the first time the company has agreed to classify its drivers in this way, and it comes in response to a landmark British Supreme Court decision last month that said Uber drivers were entitled to more protections.

The decision represents a shift for Uber, though the move was made easier by British labor rules that offer a middle ground between freelancers and full employees that doesn’t exist in other countries. That middle ground makes it unclear whether Uber will change its stance elsewhere. More labor battles are coming in the European Union, where policymakers are considering tougher labor regulations of gig-economy companies, as well as in the United States.

employee,” which includes paternity and maternity leave and severance pay if dismissed, among other benefits.

Britain’s minimum wage for people over 25 years old will be 8.91 pounds, or about $12.40.

For vacation, drivers will receive 12 percent of their earnings, paid out every two weeks, a calculation set by the government.

Uber did not disclose how much the reclassification of British drivers would increase its costs, but it said in a regulatory filing that it did not alter the company’s target of becoming profitable this year. London is one of Uber’s five largest markets, and Britain accounts for about 6.4 percent of the company’s total gross bookings.

Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, put pressure on other ride-hailing companies to adopt similar policies in Britain.

“Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives,” he said in the statement.

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In First, Uber Agrees to Classify British Drivers as ‘Workers’

LONDON — For years, Uber has successfully deployed armies of lawyers and lobbyists around the world to fight attempts to reclassify drivers as company workers entitled to higher wages and benefits rather than lower-cost, self-employed freelancers.

Now the ride-hailing giant is retreating from that hard-line stance in Britain, one of its most important markets, after a major legal defeat.

On Tuesday, Uber said it would reclassify more than 70,000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan. The decision, Uber said, is the first time the company has agreed to classify its drivers in this way, and it comes in response to a landmark British Supreme Court decision last month that said Uber drivers were entitled to more protections.

The decision represents a shift for Uber, though the move was made easier by British labor rules that offer a middle ground between freelancers and full employees that doesn’t exist in other countries. That middle ground makes it unclear whether Uber will change its stance elsewhere. More labor battles are coming in the European Union, where policymakers are considering tougher labor regulations of gig-economy companies, as well as in the United States.

employee,” which includes paternity and maternity leave and severance pay if dismissed, among other benefits.

Britain’s minimum wage for people over 25 years old will be 8.91 pounds, or about $12.40.

For vacation, drivers will receive 12 percent of their earnings, paid out every two weeks, a calculation set by the government.

Uber did not disclose how much the reclassification of British drivers would increase its costs, but it said in a regulatory filing that it did not alter the company’s target of becoming profitable this year. London is one of Uber’s five largest markets, and Britain accounts for about 6.4 percent of the company’s total gross bookings.

Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, put pressure on other ride-hailing companies to adopt similar policies in Britain.

“Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives,” he said in the statement.

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For Gig Workers and Business Owners, Taxes Are Even Trickier Now

The revamped credit “is a better program — there’s more money, and it’s available to more employers,” said Shelly Abril, the head of tax compliance at Gusto, a payroll services provider. “But with that comes all this extra complexity.”

Devon Lind plans to seek retroactive 2020 credits for his workers at Blender, a collection of businesses in Spokane, Wash. Blender’s two core businesses — Photoboxx, which sells photo printing and display technology, and Smash, a mobile “rage room” where people can destroy plates — both depend on events, and sales plunged last year. The company had nine employees before the pandemic. It laid off five.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

Because Blender took a Paycheck Protection Program loan, it was initially ineligible for the retention credit, but Mr. Lind now plans to seek it for two quarters last year. The credit “is really going to help us continue to retain employees as we’re gaining back business,” he said.

But extracting the most money allowed from the credit is complicated because of the way it interacts with P.P.P. proceeds — and the Internal Revenue Service hasn’t yet provided detailed guidance.

“There’s just tons of nuance in the credit,” said Andre Shevchuck, a partner at the accounting firm BPM. “We have instructed a lot of clients to first check in with their payroll provider to see how the rubber meets the road, and it may also make sense for businesses to talk to a C.P.A or a lawyer.”

Self-employed workers are normally not eligible for unemployment compensation, but the CARES Act extended benefits to them. Ms. Holcomb filed for unemployment when her contract job temporarily eliminated her hours.

Some who collected the money are in for a tax-time shock, though: The payments are taxed as income. States are supposed to offer recipients the option of having federal taxes withheld, but in their scramble to deal with a deluge of claims, some states didn’t do it — and many people, faced with urgent bills and a reduced income, declined the option. Researchers at the Century Foundation estimate that fewer than 40 percent of unemployment payments last year had taxes withheld.

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