To point out IR35 is a major factor in the lack of HGV drivers

[mikedyson]

As this well researched (for once) article in the i points out =

inews.co.uk/news/hgv-driver-shortage-tax-change-ir35-lorry-crisis-uk-europe-1239313?ito=email_share_article-top

[quote SudokuWillNotSaveYou]@VanGoghsDog So, reverse the words (sorry I bollocksed it). Either way, you have a graph where IR35 isn’t the determinate. The steep rise seems to have started around Brexit or even April of “Brexit year” (Brexit plus the 90 days some workers might have been allowed to stay?) and IR35 only came in when it was already halfway up.

Point: The graph shows a steep loss of drivers starts before IR35 and IR35 is just another pile of shite on the way.[/quote]
IR35 came in April.

I think you've misunderstood that graph.

I heard a Polish truck driver on
LBC a few days ago - he said that IR35 was one of the main reasons for drivers leaving UK. They saw a steep drop in their income - his words "from £1300 a week to £700".

This has definitely been underplayed by the media.

"IR35 came in April.

I think you've misunderstood that graph"

I think you've misunderstood IR35 - it became law in 2000. It has been around a long time.

What changed in April 2021 was that in the private sector, the client became responsible for determining the employment status of the worker. This change happened earlier in the public sector (2017)

@ExtraOnions

IR35 is a pretty straightforward test to show if you should be treated as an employee. If you can’t use a substitute, get told what you need to do (as well as when, and how), and aren’t at much financial risk… you are probably inside. I do these assessments for IT contractors, a lot of people have avoided a lot if tax by taking the benefits of being a company, with none of the risk. If you are truly self-employed, you won’t be found to be inside … How many companies would allow a haulier to send a substitute - that they have no right to interview, and no right to reject ?

I agree, and also have experience of doing these assessments. Genuine freelancing shouldn't be a problem (although some companies are taking a very risk averse stance), but a lot of the haulage industry does not fall in that category.

@jgw1

So, haulage companies and hgv drivers were trying to dodge tax and national insurance and now they can't. Might it not make more sense for the haulage companies simply to pay employees properly?

I see you've fallen for the HMRC propaganda.

For a lot of them, it was nothing to do with "dodging" tax and NIC. A lot of drivers were genuinely self employed (in accordance with long established case law, not HMRC's wishful thinking!).

IR35 has forced the burden of both employee and employer NIC onto the driver, plus apprentice levies and agency fees.

Ironically, they'd pay less tax if they were employed directly by the haulage firms as then the haulage firm would be responsible for the employers NIC, apprentice levies and other "employment" costs.

As said, HMRC have been repeatedly warned by numerous professional bodies and trade bodies that IR35 would cause a shortage or workers. It's exactly what happened a couple of years ago when IR35 was enforced on the public sector, causing a shortage of "self employed" doctors, consultants, GPs etc. Trouble is that the HMRC clowns don't understand and don't listen to the reality.

I do these assessments for IT contractors, a lot of people have avoided a lot if tax by taking the benefits of being a company, with none of the risk.
While I was contracting, I was let go of twice American-style. As in, you come in the morning, and are given 2 hours to pack your things and leave. No redress, no severance pay, no warning. And that's it, you don't have any income any more. And if you can't find a contract, you will be very ill advised to take a PAYE role in the same tax year, as you'd get hit by an extra rate of tax on dividends already drawn in the year.

It definitely wasn't the low risk way. Yes, the net was higher (not outrageously higher, by the way), but it came with significant risks attached.

Now what happens is that the intermediation switched to "umbrella" companies where you are paying more than what you would as a PAYE employee - as you are paying the employers NI and pension contributions too.

@Ibelieveinghosts

Despite apparently constantly striving towards the simplification of tax it just gets increasingly complex and difficult for the average man in the street to understand. I’ve worked in tax for 20 years. My legislation books are now double (at least) in size to what they were then.

Ignoring the moral rights and wrongs of what went on before. Anyone now caught foul of IR35 ( and let’s not forget it’s been around in one way or another for a long time) will effectively have had a cut in net pay. Anyone facing a pay cut is going to look round for alternative employment with either better money or conditions. It was stupid to do this at the same time as Brexit.

Well said. Changing the IR35 rules in the middle of a pandemic and just after Brexit was incredibly stupid.

They've only changed the rules because the whole thing is flawed. It was flawed back in 2000 when first introduced and it's still flawed because HMRC havn't addressed the fundamental flaws.

They've now just passed the burden and responsibility to the "employer" in the hope that lots of people will get caught despite not actually being caught, just because they hope the "employers" will be too lazy to do proper IR35 evaluations.

When IR35 was first announced in the early 2000s (Dawn Primarolo & Steven Timms) targeting IT contractors, we banded together to fight it.

As I said in a post yesterday, we’ve always had to have public & personal indemnity & liability insurance, don’t get holiday or sick pay, have to fork out for additional accountants, pay for our own equipment etc., none of which a permanent staff member needs to do. And yet we have to pay as if we are permanent employees of our clients! If we multi contract, it can be considered outside of IR35, but in reality, especially on a longer (and more secure financially) contract we get taxed to the hilt - all of the above plus, if we have a limited company, we have the corporation tax to factor in, plus other company expenses (annual returns etc), employer NI & pension contributions.

Multiply that to other sectors & I’m not surprised in the slightest that it’s contributing to a deficit in HGV drivers.

I’m happy to pay tax, of course it’s important, but us contractors in all sectors are forced by clients to be self employed via a limited company, don’t have the benefits of holidays, sick days or other ‘perks’ (unless we raise our rates to compensate for that, which make us less desirable to clients versus offshore developers - although the amount of work we’ve picked up fixing off shore disasters is huge).

My husband was fortunate enough to get a well paid permie job this year, with pensions & private healthcare and 9-5:30pm hours & no faffing!) as, after 20 years & multiple iterations of contracting via our own limited companies, self employment etc (whatever the client requested, it’s been a clusterfudge of a decade or two) he’d had enough.

Im still using my limited co for a new era & utterly different endeavour, working for myself, but it’s refreshing (even living off meagre savings) to not be treated by a client as a permanent member of staff with none of the benefits.

I hate this govt with a passion. HGV drivers are worse off as they can’t multi contract as easily due to driving time legislation.

IR35 needs to die a horrible, horrible death as it kills competition v overseas staff, doesn’t actually protect the contractor at all, just are covers the client.

@ExtraOnions Wanting all the tax breaks of being self employed, with none of the risk

Self employment has fundamental inherent risks, such as lack of entitlements to holiday pay, statutory sick/maternity pay, lack of rights for statutory redundancy/notice periods, etc. The whole point of self employment is the "risk" of being let go at short/no notice, with no employment protections.

Just look at covid - that shows the "risk", i.e. the vast majority of self employed using their own companies will have received minimal covid support grants, so that's another massive financial hit which proves the inherent risk that they bear.

But beyond that, they're often required to provide their own professional indemnity and other insurances, pay for their own training and licences and health examinations, etc.

At the end of the day, HMRC needs to sort out the tax system as it's not fit for purpose. It's crazy that someone self employed as a sole trader has a different set of tax rules (relieves, rates, etc) compared to an identical self employed person operating as a limited company doing the exact same work. Yet, as each government comes and goes, as each Treasury minister comes and goes, they make it worse, not better with their continual faffing around the edges rather than actually addressing the inherent issues.

@jgw1

So, haulage companies and hgv drivers were trying to dodge tax and national insurance and now they can't. Might it not make more sense for the haulage companies simply to pay employees properly?

This. I don't have much sympathy with the IR35 bleating, whatever the sector.

[quote mikedyson]As this well researched (for once) article in the i points out =

inews.co.uk/news/hgv-driver-shortage-tax-change-ir35-lorry-crisis-uk-europe-1239313?ito=email_share_article-top[/quote]
absolute rubbish, coming from an ex hgv 1 driver! i can give you many many reasons why drivers are leaving, and the only time any of us bring up the tax issue is the fact that once again we are treated unfairly with the payment for having to sleep out in the truck being taxed yet a sale rep getting a proper hotel bed paid for by the company doesnt pay any tax on that at all.

the one main reason that drivers are leaving is down to the cpc requirements, like with me i simply cant afford to do it. i cant get a job without it and i cant afford to do the course without a job!

add to that the conditions we work under and are forced to live in it would take a lot more than £70k to get me to go back and risk my life for very little gratitude

Ironically, they'd pay less tax if they were employed directly by the haulage firms as then the haulage firm would be responsible for the employers NIC, apprentice levies and other "employment" costs.

I am very confused. The article that the OP linked to seemed to indicate that lorry drivers were leaving because being directly employed meant a pay cut. Are you saying the article is wrong?

@jgw1

Ironically, they'd pay less tax if they were employed directly by the haulage firms as then the haulage firm would be responsible for the employers NIC, apprentice levies and other "employment" costs.

I am very confused. The article that the OP linked to seemed to indicate that lorry drivers were leaving because being directly employed meant a pay cut. Are you saying the article is wrong?

the article is totally wrong! they are not leaving because of the tax situtation, they are leaving because of how they are treated, the pay they get, the conditions they have to work under, until you have done the job you will never understand what it is like. even prisoners cells are bigger than the cabs we had to sleep in and live in! you try sleeping/ relaxing/cooking/dressing/washing in the space of your average family bath tub! for 5 nights a week

I am very confused. The article that the OP linked to seemed to indicate that lorry drivers were leaving because being directly employed meant a pay cut. Are you saying the article is wrong?
Let me use my own example, not sure how it works with the haulage industry (I am in IT/finance). I am now employed not by my own limited company, but by an "umbrella" that additionally takes a ~10% margin from my gross pay for their services. The very reason why clients use contractors is because they don't want permanent staff, so that hasn't changed. I still have zero employment protection - I am on min wage with the umbrella, zero hours, and my actual net pay is paid to me as a "bonus" every month. In addition, they take their NI and compulsory pension contributions (their duty as an employer) from my gross pay. Any of my holidays are paid on min wage. And the HMRC warns me that I am responsible to ensure that this umbrella company is actually paying the correct amount of tax in my name, and not using any dodgy schemes.

So yes, had I been employed like a "normal" employee, yes it probably would be marginally more beneficial net (assuming the same gross, which is never the case). The issue is that I am still not a "normal" employee, I am paying the employers contributions too, as well as the intermediary's profit margin.

Quite honestly, this looks like the contractors loan scheme scandal in the making all over again.

@takenforgrantednana

Cpc is 35 hours over five years isn’t it?

It’s odd they haven’t dropped the driver CPC now at least for UK drivers as it was an EU requirement.

YANBU OP. It’s hit a lot of industries hard.

A bit of foresight from the government given Brexit and Covid would not have gone amiss.

Lot of companies are taking a risk averse stance but it’s not surprising given the huge admin burden involved.

This. I don't have much sympathy with the IR35 bleating, whatever the sector.
Fine, just don’t bleat about supply chain issues or IT problems.

@forinborin

I am very confused. The article that the OP linked to seemed to indicate that lorry drivers were leaving because being directly employed meant a pay cut. Are you saying the article is wrong? Let me use my own example, not sure how it works with the haulage industry (I am in IT/finance). I am now employed not by my own limited company, but by an "umbrella" that additionally takes a ~10% margin from my gross pay for their services. The very reason why clients use contractors is because they don't want permanent staff, so that hasn't changed. I still have zero employment protection - I am on min wage with the umbrella, zero hours, and my actual net pay is paid to me as a "bonus" every month. In addition, they take their NI and compulsory pension contributions (their duty as an employer) from my gross pay. Any of my holidays are paid on min wage. And the HMRC warns me that I am responsible to ensure that this umbrella company is actually paying the correct amount of tax in my name, and not using any dodgy schemes.

So yes, had I been employed like a "normal" employee, yes it probably would be marginally more beneficial net (assuming the same gross, which is never the case). The issue is that I am still not a "normal" employee, I am paying the employers contributions too, as well as the intermediary's profit margin.

Quite honestly, this looks like the contractors loan scheme scandal in the making all over again.

Why do employers not want permanent staff?

Surely that is the problem not HMRCs rules?

@GurtBusty

"IR35 came in April.

I think you've misunderstood that graph"

I think you've misunderstood IR35 - it became law in 2000. It has been around a long time.

What changed in April 2021 was that in the private sector, the client became responsible for determining the employment status of the worker. This change happened earlier in the public sector (2017)

I absolutely have not misunderstood IR35, it's part of my job. I was (quite clearly) talking about the changes this year which is what this thread is about. They point being "April" if you look at what I was responding to.

I don't have any skin in the game here so there's no need to correct me, I was just pointing out that the point that poster thought they were making about that graph didn't make sense and that it looked as if they had misunderstood the graph.

I can't answer for everyone @jgw1 but for me it's because I provide a specialist service which companies don't need full time.

I don't want to work full time because I have caring commitments which means full time work doesn't work very well for me. Those caring commitments obviously are things that are taking some of the burden off the state. But there is no joined up thinking.

[quote user1497207191]**@ExtraOnions* Wanting all the tax breaks of being self employed, with none of the risk*

Self employment has fundamental inherent risks, such as lack of entitlements to holiday pay, statutory sick/maternity pay, lack of rights for statutory redundancy/notice periods, etc. The whole point of self employment is the "risk" of being let go at short/no notice, with no employment protections.

Just look at covid - that shows the "risk", i.e. the vast majority of self employed using their own companies will have received minimal covid support grants, so that's another massive financial hit which proves the inherent risk that they bear.

But beyond that, they're often required to provide their own professional indemnity and other insurances, pay for their own training and licences and health examinations, etc.[/quote]
I got nothing, because I work in a mix of self employed and employed roles, short term. Tax year 19/20 I was employed. Dec 20 started a contract role, was due to be until July, then in Feb they were talking about extending to Dec, then in May they terminated due to Covid cancelling a number of projects. As I had not submitted self employed income in the previous tax year there was no grant for me. And as I was not employed by anyone (I had chosen not to employ myself via my Ltd co and took no salary) I could not claim furlough.

Luckily, I am aware that this model has risks and I have savings to cover downtime, plus I do separate consultancy work, and got a new role in September. But it does show the risks people who work on contracts take.

Why do employers not want permanent staff?

Endless reasons. Seasonal work, short term projects, cover maternity/other types of leave, need a specific skill but only for a short time, restructuring, rapid growth, problems recruiting.... honestly, there are so many reasons!

My current role, ironically, only exists because of Covid.

Why do employers not want permanent staff?
Surely that is the problem not HMRCs rules?

No, it is quite normal. There are many projects at all skill levels where hiring permanent staff just does not make a lot of sense. From seasonal work, to one-off restructuring / innovation projects. Also, not all workers necessarily want permanent jobs either - when my children were smaller, I preferred working at 200% pay for 6 months (even though the projects were very intense) instead of at 100% pay for 12 months. Some people just like the constant change of environment and new challenges, know a couple like that.

It was a fair trade before, both for employer and the employee. Now I am paying roughly the same overall tax as before (not paying corporate tax anymore, instead paying a slightly higher income tax and NI), but additionally also paying the employer's taxes and the profit margin (that goes to private pockets). Nothing else has changed - I am still expected to provide my own tools of trade, in my case - pay for software licenses / professional membership fees / training and certification as unpaid time etc. Holidays, maternity, sick leave are all limited to statutory minimum / calculated based off min wage.

I'd be really interested to see the dry financial analysis of how successful IR35 has been once the dust settles. From my perspective I can only see a complete shitstorm that does not actually lead to higher overall tax revenues (well, on a very limited sample of me and a couple other contractors I know).

[quote mikedyson]@takenforgrantednana

Cpc is 35 hours over five years isn’t it?

It’s odd they haven’t dropped the driver CPC now at least for UK drivers as it was an EU requirement.[/quote]
no thats not quite right, once you have already done the cpc and passed you then have a further 5 years to do to keep it up to date, so its an ongoing expense, the original cpc will cost approx £500 and in my case i also need a photo drivers licence (30) a medical (£200) digi tacho card (£30) so i would need £750 before i even applied for any work which is money i havent got