TAX CODE changes have contributed to a lorry driver shortage with workers being paid relatively less, new analysis shows.
Analysis from i shows rather than Brexit or factors caused by the pandemic, a change to the tax code has caused truck drivers to leave the industry in large numbers. In April 2021, the Government changed the rules which decide whether someone who works for a company is considered an employee or contractor.
The rules known as IR35 or off-payroll working rules, previously allowed truck drivers to decide whether they were employees or contractors.
A large number of drivers classified themselves as contractors, which left them without protections of permanent employment but did provide them with a reduced tax bill.
Employees supported the measures as they did not have to give out employee benefits or pay National Insurance contributions.
However, the new changes give the power to employers to decide who is a contractor and employee with consequences if they are mistaken by HM Revenue and Customs (HMRC).
The pay effective pay fall has caused drivers to leave the industry.
EU drivers are among those leaving the industry and country after the removal of the tax breaks.
Driver David Foster told i: “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 you’re 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.”
The IR35 changes also affects IT contractors and agency nurses losing out due to the adjustment.
He added: “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.”
A HMRC spokesperson has commented on the change, they 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. “Brinkwire Summary News”.