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IR35 reform was introduced to tackle the issue of tax and NI avoidance within the public, and more recently the private sector. These changes are due to be implemented in the private sector in April 2021 and will directly impact many organisations across the UK across multiple sectors.
It is important that if you’re a driver currently working on a self-employed basis, that you understand these changes as they are likely to affect your net salary through an increase in the tax and NI that you pay.
Here are our top IR35 facts for HGV drivers.
All workers doing the same job will be subject to the same statutory PAYE income tax and NI deductions.
HMRC is making the changes to ensure that work carried out by those providing their services through their own personal service company is categorised, for tax purposes, as either genuine self-employment (“outside IR35”) or disguised employment (“inside IR35”).
The new IR35 legislation is set to ensure that those workers deemed to be “disguised employees” are taxed, through PAYE income tax and National Insurance, in exactly the same way as any other employee - after all, they are doing the same job.
If you’re currently working as self-employed through your own limited company / PSC, and you fall “inside IR35” under the reforms, then you will start to have Tax and NI deductions made by your agency, which will impact your take home pay.
They will make this decision based on a number of factors. Many end clients may make a policy decision to no longer accept any PSC drivers. Those that continue to do so would then have to consider each role individually, and issue a Status Determination Statement confirming the position; but it is more than likely that as a HGV driver, your work will be inside IR35 if:
-You are ultimately under the supervision, direction and control of the client when you are working for them
-You expect to paid per hour worked regardless of whether the work is of unsatisfactory quality
-You cannot substitute yourself with another worker should you be unable to fulfil all or part of the work.
We recommend that any driver currently operating through a PSC takes advice from their accountant. If a driver wants to continue to be paid through a PSC, but “inside IR35” for tax purposes, they must bear the costs of employer’s National Insurance, pension contributions, and the apprenticeship levy, by reducing their pay rate. Some end clients may accept an increase in the amount that they pay, to soften the tax blow to the drivers – it may take some time for the market to adjust to the new rules.
Unless you own your own vehicle, any HGV job you undertake will be classed as “Inside IR35”
The proposed changes are likely to have a significant impact upon how HGV drivers are taxed in the UK. HMRC has a very clear view on the employment status of drivers. They state that:
“….. in road haulage it is rare for someone to be genuinely self-employed unless they are an owner-driver”.
This means that in their view, except in specific circumstances such as vehicle or company ownership, HMRC believes that a driver is an employee and should be subject to the necessary tax, also known as ‘inside IR35’.
For certain transport providers, it may be possible for you to become employed by an accredited umbrella company. Don‘t forget that there will be monthly and annual processing fees (around £25 per week) to factor in on top of the tax and NI deductions.
For those workers who want to investigate the umbrella company option, Search has access to a number of reputable and established umbrella companies that we can put you in touch with.
By far the most straight forward solution to your conundrum here is to continue working with Search but as a PAYE (pay as you earn employee).
Working with us on these terms will give you access to the same work, and Search will be responsible for dealing with all of the statutory tax deductions. You can find out more about the benefits of temping with Search here.
“We encourage anyone who is concerned about IR35 to develop a clear way forward to deal with the changes, and not leave it to the last minute. You can contact Search for advice whilst looking for your next contractor or transport role,” Lindsey Thompson, Associate Director, Search Driving.
If you would like further guidance on this, please do not hesitate to contact Search Driving and we will be more than happy to help.
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