Analysis by i shows that it was a change to the tax code, rather than Brexit or the COVID-19 pandemic, that prompted truck drivers to leave the industry in huge numbers, i News reports.
The impact of IR35 changes has been felt more widely than by HGV drivers alone, with a cross-section of workers from IT contractors to agency nurses losing out due to the adjustment. Business analytics firm Simply Business surveyed 250 contractors and 91 per cent of respondents reported that the change will affect their bottom line.
In April 2021, the UK Government changed the rules which determine whether someone who works for a company is classified as a contractor or an employee.
These rules - called IR35, or off-payroll working rules - were used to allow truck drivers to decide whether they were contractors or employees. Many drivers would classify themselves as contractors; leaving them without the protections of permanent employment but with a potentially reduced tax bill.
At the same time, both agencies hiring drivers and large trucking companies tacitly endorsed the practice because it meant companies could avoid paying employers’ National Insurance contributions or giving contractors employee benefits.
However, changes to the rules mean that employers, rather than drivers, are now required to decide who is an employee and who is a contractor. And mistakes carry financial consequences from HM Revenue and Customs (HMRC).
The shift led to a flurry of drivers abandoning the industry as a result of the effective pay fall.
Brexit has previously been cited as a factor in HGV driver shortages - in addition to the COVID-19 pandemic and complaints about poor working conditions - yet IR35 is seen by many as having had a bigger impact on the crisis.
European drivers are among those leaving the industry and the country; without the tax breaks, they see little reason to continue driving in the UK.
Driver David Foster said, “I work for a company that lost at least 250 drivers due to the tax changes. If you’re self-employed you’re making £1,300 a week, when you’re classed as an employee your down to £650-700 a week, which is a massive reduction. European drivers have come in because of freedom of movement and now they’ve all gone back home because of this.
“From December when Brexit came about to April we had no shortage of drivers, the shortage only started once IR-35 kicked in. I voted for the Conservatives because there were no other options at the time, but the driver shortage was created by the Chancellor.”
Following the introduction of the IR35 changes, vacancies in the transport and storage sector rose almost instantly to their highest point. Though vacancies had already been steadily rising, bar a brief fall at the height of the pandemic.
The industry’s reliance on the IR-35 tax rules pinpoints the wider issue of drivers being underpaid by large companies, with the state left to make up the shortfall through the IR-35 tax break.
Steve Finlay - a man who has been in transport for his entire working life - said, “I work for one of the biggest truck companies in the Northeast. Up until recently, the drivers who were driving Monday to Friday were on £10 an hour.
“You get more working on the tills on Aldi. Half of the places we go to the guy who’s loading the truck is on more money than the driver.”
Many drivers have left the industry because they can earn more money working fewer hours doing almost anything else.
Steve Wright - a former lorry driver - said, “My mate started a taxi business where I live, and they’re making twice as much as I earn. It’s a no brainer.
“I can be away from home all week, and the take-home pay is £600 a week. Most weeks you start on a Monday and you roll-in on a Saturday. I’m finished with it.”
Commenting on the rule change, a spokesperson for HMRC said, “The off-payroll working rules were designed to ensure individuals pay similar levels of tax regardless of the structure they work through. The changes in April 2021 do not introduce a new liability. They ensure the rules, which have been in place since 2000, are applied as intended.
HMRC has offered extensive education and support to those implementing the changes, including tailored content to help the haulage and transport sector to comply. We proactively worked with transport industry representative bodies to understand their concerns and offered additional support to help with the understanding and implementation of the rules. We have also worked with cross-government partners to deliver an off-payroll webinar attended by over 40 industry representatives.”
Source: i News
(Links and quotes via original reporting)
Analysis by i shows that it was a change to the tax code, rather than Brexit or the COVID-19 pandemic, that prompted truck drivers to leave the industry in huge numbers, i News reports.
The impact of IR35 changes has been felt more widely than by HGV drivers alone, with a cross-section of workers from IT contractors to agency nurses losing out due to the adjustment. Business analytics firm Simply Business surveyed 250 contractors and 91 per cent of respondents reported that the change will affect their bottom line.
In April 2021, the UK Government changed the rules which determine whether someone who works for a company is classified as a contractor or an employee.
These rules - called IR35, or off-payroll working rules - were used to allow truck drivers to decide whether they were contractors or employees. Many drivers would classify themselves as contractors; leaving them without the protections of permanent employment but with a potentially reduced tax bill.
At the same time, both agencies hiring drivers and large trucking companies tacitly endorsed the practice because it meant companies could avoid paying employers’ National Insurance contributions or giving contractors employee benefits.
However, changes to the rules mean that employers, rather than drivers, are now required to decide who is an employee and who is a contractor. And mistakes carry financial consequences from HM Revenue and Customs (HMRC).
The shift led to a flurry of drivers abandoning the industry as a result of the effective pay fall.
Brexit has previously been cited as a factor in HGV driver shortages - in addition to the COVID-19 pandemic and complaints about poor working conditions - yet IR35 is seen by many as having had a bigger impact on the crisis.
European drivers are among those leaving the industry and the country; without the tax breaks, they see little reason to continue driving in the UK.
Driver David Foster said, “I work for a company that lost at least 250 drivers due to the tax changes. If you’re self-employed you’re making £1,300 a week, when you’re classed as an employee your down to £650-700 a week, which is a massive reduction. European drivers have come in because of freedom of movement and now they’ve all gone back home because of this.
“From December when Brexit came about to April we had no shortage of drivers, the shortage only started once IR-35 kicked in. I voted for the Conservatives because there were no other options at the time, but the driver shortage was created by the Chancellor.”
Following the introduction of the IR35 changes, vacancies in the transport and storage sector rose almost instantly to their highest point. Though vacancies had already been steadily rising, bar a brief fall at the height of the pandemic.
The industry’s reliance on the IR-35 tax rules pinpoints the wider issue of drivers being underpaid by large companies, with the state left to make up the shortfall through the IR-35 tax break.
Steve Finlay - a man who has been in transport for his entire working life - said, “I work for one of the biggest truck companies in the Northeast. Up until recently, the drivers who were driving Monday to Friday were on £10 an hour.
“You get more working on the tills on Aldi. Half of the places we go to the guy who’s loading the truck is on more money than the driver.”
Many drivers have left the industry because they can earn more money working fewer hours doing almost anything else.
Steve Wright - a former lorry driver - said, “My mate started a taxi business where I live, and they’re making twice as much as I earn. It’s a no brainer.
“I can be away from home all week, and the take-home pay is £600 a week. Most weeks you start on a Monday and you roll-in on a Saturday. I’m finished with it.”
Commenting on the rule change, a spokesperson for HMRC said, “The off-payroll working rules were designed to ensure individuals pay similar levels of tax regardless of the structure they work through. The changes in April 2021 do not introduce a new liability. They ensure the rules, which have been in place since 2000, are applied as intended.
HMRC has offered extensive education and support to those implementing the changes, including tailored content to help the haulage and transport sector to comply. We proactively worked with transport industry representative bodies to understand their concerns and offered additional support to help with the understanding and implementation of the rules. We have also worked with cross-government partners to deliver an off-payroll webinar attended by over 40 industry representatives.”
Source: i News
(Links and quotes via original reporting)