ContractorCalculator is calling on all self-employed workers to help sustain their futures by signing a new petition - Off-Payroll: Give full rights to workers classed as ‘employed for tax purposes'.
However you operate, we need your help to prevent irrevocable damage to flexible working and to protect the rights of UK workers.
Recently, HMRC released a consultation called ‘Off-Payroll Working in the Private Sector’. Its proposed measures, if enacted, would have disastrous consequences for everybody who enjoys the benefits that flexible working brings, as well as for the UK’s most vulnerable workers, specifically:
- Subjecting the genuinely self-employed to excessive taxation
- Exploiting and overtaxing some of the most vulnerable and valuable workers
- Denying these individuals basic workers’ rights.
Overtaxed and underprivileged: HMRC’s proposal for UK workers
HMRC is looking to tackle what it perceives to be non-compliance with legislation commonly known as IR35, which attempts to ensure that contractors operating through limited companies, but working like employees, pay broadly the same amount of tax as they would if they were employed.
HMRC is seeking to tax the self-employed more, using legislation commonly known as IR35. This attempts to make contractors pay more tax than employees, by foisting on them an additional tax bill normally paid by employers, namely employers National Insurance. Employers NI is a 13.8% tax, paid by a corporation on top of each workers salary when it hires employees. HMRC now wants the self-employed to pay this additional tax out of their earnings.
Though HMRC insists that employment status is not a choice, its proposed legislative changes enable end clients to decide the employment status of their contingent workers, deeming them ‘employed for tax purposes’ if it sees fit, without granting them the equivalent workers’ rights.
These rules have been active in the public sector for a year, during which time public sector bodies have demonstrated that decisions on how to tax workers are often motive-driven.
Many public-sector organisations have pushed genuinely self-employed contractors into ‘employed for tax purposes’ status to avoid the associated risks of back taxes and penalties. And, while the legislation states clearly that the hirer should be contributing employer’s National Insurance (NI) within these arrangements, many are deducting these costs from the workers’ pay packet.
The low paid and vulnerable are most often exploited in this way because they have no bargaining power and no other means of securing work. Within the NHS, these unlawful arrangements have seen many locum nurses lose a third of their post-tax income, yet they are denied even basic workers’ rights in return.
Don’t let HMRC exploit the UK workforce
HMRC’s consultation states: ‘where an individual is working in the same way as an employee, they should pay broadly the same employment taxes as an employee.’ However, it goes on to clarify that those subject to more tax will not receive the employment rights which we believe logic suggests they are entitled to.
It is a very simple premise that if a client deems you to be their employee they should provide you with employment rights. This alignment of tax and employment law was a key recommendation in the Government-commissioned Taylor Review into modern working practices.
Somehow, HMRC hasn’t come to the same conclusion and has refused to consider this simple recommendation within its consultation. Instead, the taxman wants to introduce rules incentivising clients to subject contingent workers to further taxation while passing their own employment tax bills onto them, all without conferring any rights on them.
HMRC’s refusal to consider the alignment of tax and employment law will pave the way for mass oppression of millions of the UK’s most vulnerable workers unless we take action.
Redress the imbalance: employment rights for ‘deemed employees’
It’s ludicrous that Government is considering a wider rollout of this legislation when HMRC can’t even police the evident non-compliance and exploitation of workers in the public sector. It’s even more farcical that its proposals allow firms to class flexible workers as their employees, without affording them employment rights.
Please sign this petition to help Government see sense before it introduces rules which further erode the rights of some of the most vulnerable workers in this country.