Great news for NG27 but the unfortunate IR35 reform extension makes for a short-lived celebration. What to learn from this week’s news? Always be prepared and protect yourself.
The NG27 WIN!
A group of 27 teachers at the National Gallery have won their court case against the gallery for wrongful termination. A tribunal ruled last week that they should have been classified as workers rather than as self-employed.
This decision is bound to affect the precedent for workers in public sector organisations. It makes sense that the educators were not self-employed, as they were paid through company payroll, worked regular hours, and were required to attend training sessions.
The Gallery is currently discussing next steps with their own legal counsel.
Taxes set to increase for Freelancers, without granting holiday or sick pay
IR35 dictates that self-employed people who operate as a company and are on a long-term contract are seen as employees under tax law. Therefore they must start paying more tax, the same amount as employed people in fact, but without having any of the benefits of being employed, such as receiving holiday or sick pay.
The Taylor Review raised this issue, but seems not to have been taken on by the Government. Dave Chaplin, who works for the advice site ContractorCalculator, shared his opinion on the matter: “The rules effectively introduce a new tax on freelance workers, by classing them as ‘employed for tax purposes only’ while denying them employment rights.
“This opposes the intentions of the Government’s Good Work Plan, designed to prevent unscrupulous firms forcing vulnerable workers into precarious work.”
IPSE labels the IR35 extension into the private sector ‘myopic’
IPSE’s Deputy Director of Policy Andy Chamberlain commented that the Government’s decision to push ahead with the extension of the IR35 reforms: “is an astonishingly myopic move. The UK’s greatest competitive advantage is its flexible labour market. This proposal will dramatically restrict that flexibility and starve UK businesses of the freelance talent they need to get work done.”
HMRC blames the BBC for the tax scandal surrounding its freelancers
In an attempt to justify the BBC Presenter tax scandal, on 4th March at the Public Accounts Committee (PAC) hearing HMRC told MPs that the BBC are at fault for the hundreds of freelance presenters who are facing tax bills, not the CEST system.
A National Audit Office (NAO) report revealed that CEST’s evaluation of 663 BBC freelancers found that 92% had been ‘employed for tax purposes’, a contentious result when compared to the BBC’s previous assessments.
ContractorCalculator’s CEO Dave Chaplin said:
“Rather than accept the possibility that the extremely dubious results were down to fundamental issues with CEST, HMRC has simply accused the BBC of incorrectly applying HMRC-approved status assessment practices. CEST-users beware, this could soon be your fate.”
So what can organisations do to ensure they answer CEST’s questions correctly?
HMRC’S Jim Harra gave this response: “They need to have systems and processes in place that will withstand our scrutiny. What we will look at is the process that businesses follow internally to make sure that they are entering the true facts into the tool.”
Like us, Chaplin was less than satisfied with Harra’s unclear response: “This is a rather vague answer, and I’m sure private sector firms will be eager to find out exactly what the taxman expects of them in the near future. In any case, how HMRC expects to conduct such evaluations of the processes of all users of CEST is anybody’s guess.”
Fiverr comes to London
Freelance Platform Fiverr announces the opening of it’s first UK office, which will be in London. From this international company (who operate in 160 countries) turning their attention to making bigger freelance waves in the UK, it shows just how much the Gig Economy is expanding here and the increasing popularity of Freelancing as a career choice.
Under-protected and self-employed
Research from MetLife has found that more than half of the self-employed in the UK are under-protected. The research done by 200 advisers found that their clients are vulnerable if they are unable to work, due to a myriad of issues ranging from protection being unaffordable to a lack of awareness around protective services needed if a freelancer is unable to work.
One way to consider saving is with an ISA. Kate Beioley writes in the FT that freelancers can utilise an ISA effectively to save for times when work is sparse. The flexible nature of the ISA means that if you have an indefinite income you can save as little or as much as you wish.