At HGVC, we have our finger on the pulse of all the latest news that affects the haulage and logistics industry and today we talk about the new HMRC IR35 tax regulations that were introduced on April 6th 2021. The new rules state that large and medium-sized haulage agencies that turnover more than £10m per annum or have in excess of 50 employees are now no longer able to hire drivers who are working as a limited company.
The changes that have been made by the HMRC in order to make tax evasion more difficult mean that drivers now need to be employed on a pay as you earn (PAYE) basis by either the agency, haulier or the umbrella company. What this does is change the onus to the agency, which now needs to ensure that any agency worker they use is employed in accordance with the rules.
The Agency or End Client is Now Responsible
Under the new guidelines, the agency in question is responsible for deducting the correct level of tax and contributions to National Insurance at source. Self employed drivers have been warned by Alistair Kendric – RHA road transport tax consultant – that they need to meet the definition of being self-employed as per HRMC’s new IR35 rules.
He explains “For a driver to be considered self-employed, HMRC would expect them to be undertaking the work in their own vehicle – so not driving an agency truck and having their own operator’s licence.
If the driver uses the agency’s vehicle, is told what to do and when to do it, then HMRC will not accept that the driver is self-employed and the company using them will end up being fined ”.
The Important of Checking Driver Status
The government has set up a ‘Check Employee Status for Tax’ or CEST tool for operators wanting to determine the status of any driver they’re looking to employ. If after using the tool, it’s determined that IR35 rules apply, it’s the operator’s duty to alert the driver in question and any other relevant person in the supply chain.
If the process isn’t followed correctly, then the operator is then liable for both NI contributions and income tax, as well as interest accrued and penalties.
Upskilling is Now a More Viable Route
What this rule change means for UK companies is that hiring agency drivers is going to get more difficult and with UK HGV drivers already being in short supply, a different approach is needed. The most financially viable approach would now seem to be the upskilling of existing employees, such as warehouse workers into HGV drivers.
The good news is that accessing the training required for this upskilling is easier and more cost-effective than ever before as you’ll see when looking at HGVC’s driver training offering.
Simple, Stress-Free HGV Training for Businesses
As the reality of this new landscape sets in, UK companies will almost certainly be in need of top quality HGV training to meet their haulage needs and as the country’s leading exponent, we’re perfectly situated to provide it. We have vast experience in the field and a firm understanding of the challenges of large-scale HGV licence acquisition.
If you would like to know more about us and our industry-leading HGV driver training services for businesses, get in touch using the link below, or if you’d like to discuss your training needs directly, call us on 0330 818 8888 and we’ll be delighted to talk you through your options.