Stop The Off-Payroll Tax campaign writes to Jesse Norman calling on him to support UK contractors by scrapping the Off-Payroll Tax extension

11 Jun 2019

The Stop The Off-Payroll Tax campaign has written to the new Treasury Minister, Jesse Norman MP asking him to support UK contractors, rather than attacking them, by dropping plans to roll-out The Off-Payroll Tax – the so called ‘off-payroll rules’ – to the private sector.

The letter, on behalf of thousands of UK contractors and others who support The Off-Payroll campaign, welcomes Mr Norman’s appointment and we hope that, unlike your predecessor, you are prepared to listen and engage and make policy based on evidence – as well as showing that you and the Government value the UK’s flexible workforce, rather than seeking to attack it.

The letter states that the roll-out of the Off-Payroll Tax will cause huge damage to the UK labour market, with large companies telling contractors they will no longer take them on next year, when the Off-Payroll Tax comes in.

The letter explains that it is in reality a new double stealth tax – on both businesses and contractors, which will slap a huge 14.3% stealth tax on UK businesses. This is because the ‘fee-payer’ (client or agency) will be required to pay employment taxes on top of the payments made to contractors. This means additional tax of employer’s National Insurance (NI) (13.8%) and the Apprenticeship Levy (0.5%). This cannot be legally deducted from the current contractually agreed fee with the contractor. Therefore, as things stand, it is a new amount of tax that needs to be paid by the hirer, which is resulting in companies saying that they will stop using contractors and instead slash rates of pay, meaning no new tax take for HMRC anyway.

The letter points out the whole basis of the off-payroll rules is based on a fundamental misconception, that someone who is contracting or freelancing is not paying the right and fair amount of tax, when this is simply not the case – the tax rates are comparable to running a limited company. Plus the idea that flexible workers – who have none of the protections of employment and receive none of the benefits – should be taxed as if they did, is not only absurd but grossly unfair. The extra sums paid in contractors fees cover holidays (when contractors/freelancers are not paid) and acts as an insurance against periods of sickness and inability to work for any reason as well as to pay for self-funded pensions, something that rightly successive Governments have encouraged.

The letter asks for a meeting with Mr Norman asking him to listen and to engage and to make policy on the basis of evidence, not misplaced prejudice and false assumptions and that we hope that you will bring a much needed change to the Treasury and we urge you to halt plans to introduce the Off-Payroll Tax and instead meet with and listen to those operating in the sector and review how best to recognise contracting and freelancing in the economy.

Dave Chaplin, Director of the Stop the Off-Payroll Tax campaign and CEO of ContractorCalculator said:

The Stop The Off-Payroll Tax campaign has written to the new Minister, Jesse Norman, calling on him to change course at the Treasury to support rather than attack the UK contracting sector and drop the plans to roll-out The Off-Payroll Tax.

The reality is that the UK contracting sector has been under attack from this Government who are now insistent on introducing the Off-Payroll Tax to the private sector, despite the damage this has done to the public sector. This is a double stealth tax on business and on contractors, who don’t receive the benefits of employment or have any job security.

We are encouraged that Mr Norman has said he will listen, something the Treasury have simply not done up to now, but he needs to announce that the plans to extend the off-payroll rules will be put on hold until he does. We hope Mr Norman will accept our invitation to meet along with other organisations representing contractors and work with the sector, rather than against it.

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