Off Payroll in the Private Sector - you must be joking?
Back in April this year, new rules around the application of IR35 came into force, known as Off Payroll in the Public Sector, or more formally, Chapter 10, Part 2 Income Tax (Earnings and Pensions) Act 2003.
I won’t start moaning (OK, I will) about the fact that the rules weren’t finalised until 2 weeks before the changes came into force, meaning that it was impossible for the majority of the public sector employers and workers to get to grips with the changes in time and so countless incorrect status decisions followed. And no one really understood why their take-home pay changed. You can read a previous rant here.
I don’t think anyone who hasn’t been directly involved with this will comprehend the time, disruption and cost that these changes have caused, and now it seems the fears of the entire flexible workforce may come true – Philip Hammond, the current Chancellor (who knows when this might change given the current state of the Government?) is threatening ahead of the Autumn budget, to extend these rules to the Private Sector.
Where he has punished self-employed workers in the Public Sector by taxing them as employees, but with NO EMPLOYMENT BENEFITS, rather than stamping out false self-employment, he will mirror this across the whole UK economy.
The Government and HMRC seem intent on burying their heads in the sand to the fact that many workers have left multiple critical projects and that costs to the public sector have risen. And one thing never considered with these changes, is the costs to the economy in complying with the changes, which I assure you, probably make any tax gains in the Government’s coffers look small.
This ‘solution’ does nothing to tackle false self-employment and merely punishes those that make this country’s flexible workforce, world-class.
If the Government really wants to tackle false self-employment, it could start by creating a statutory definition of self-employment once and for all.
Or, as seems to be its intent, it could create mayhem across the economy just before the UK needs all the competitive advantage it can gain as we step away from the European Union*
*Unless the EU can persuade Britain to reverse Brexit by offering a comprehensive deal on immigration and free movement as is being reported in the press today (what Cameron wanted before the referendum).
Over to you Philip Hammond (and David Davis!)