NUJ backs peers’ report calling for freelance tax IR35 to be reformed
A new UK tax law, now due to come in next April, will cause problems for freelances and will not solve its aim to cut tax evasion.
The government must take heed of a Lords committee report and rethink its plans for a controversial tax law which will adversely affect freelances.
The House of Lords Economic Affairs Finance Bill Sub-Committee's report, Off-payroll working: treating people fairly, concluded that the planned roll-out of IR35 to the private sector was "riddled with problems, unfairnesses, and unintended consequences".
Its introduction was delayed by 12 months owing to the coronavirus crisis, but Jesse Norman, financial secretary to the treasury, indicated that the government will proceed as planned with the roll-out in April 2021.
The NUJ, together with the Federation of Entertainment Unions, had warned ministers that the introduction of IR35, which is supposed to tackle tax avoidance by "false freelances", was fraught with problems.
The union will try to persuade the government not to include the reforms in the Finance Bill, now in Parliament. IR35 already operates in the public sector.
Many witnesses told the peers' committee that the rules have made them "zero-rights employees" with none of the rights of being an employee, or the tax advantages of being self-employed.
Lord Forsyth of Drumlean, chair of the House of Lords Economic Affairs Finance Bill sub-committee, said:
"The Committee welcomed the government's decision to defer these off-payroll working rules in the wake of the Covid-19 pandemic. However, our inquiry found these rules to be riddled with problems, unfairnesses, and unintended consequences. The potential impact of the rules on the wider labour market, particularly the gig economy, has been overlooked by the government. It must devote time to analysing all of this. A wholesale reform of IR35 is required.
"The rules were deferred for a year because of the current crisis, but how prepared will businesses recovering from the crisis be to take on this extra burden on next year? The government needs to think this through very carefully. We call on the government to announce in six months' time whether it will go ahead with reintroducing these proposals."
Pamela Morton, NUJ freelance national organiser, said:
"The UK government must reconsider its decision to reject this report and take the time it now has to completely rethink IR35. We know from the roll-out to the public sector, which included the BBC, that it is seriously flawed and unfair. It has created what the report says is an 'undesirable half-way house'.
"Many individuals are forced to incorporate because companies will not deal with sole traders and such companies do not want individuals to acquire rights under employment legislation. The Covid-19 crisis has further highlighted that individuals are left with no protection or financial support. The UK government must look at this again and what support it can give."
The NUJ will be working with its cross-party Parliamentary Group to call for a major re-think of the tax.
The group will also be supporting an early day motion, sponsored by Caroline Lucas MP, which addresses the unfairness of the Coronavirus Self Employed Income Support Scheme that has left many NUJ members falling through the cracks and without financial aid. Ask your MP to sign early day motion 389 in support of the #ForgottenFreelances.