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Self-employed to be worse off amid tax reforms predicts Nigel Farage
1 March 2020, 13:06 | Updated: 1 March 2020, 13:07
After the news that the self-employed will have changes in how they pay tax in the future, Nigel Farage was joined in studio by an accountant to break down what the revelations mean.
Nigel was speaking to Martin Levin, accountant and tax expert who was in studio to dispel any worries self-employed workers may have, but the two came across a possible consequence.
Nigel pointed out that as it stands, the responsibility at the moment is with the contractor to pay tax to HMRC, but with proposed reforms, the new IR35 rules will call for the business to pay PAYE and National Insurance for all employees, including freelancers.
With the result being a lot of self-employed people having less take home pay with each contract, Nigel predicted "that's going to leave a lot of self-employed people worse off".
Martin agreed with the statement, admitting that a lot of companies won't think the changes will be worth their while hiring self-employed people.
Mr. Levin made the point that this will result in freelancers increasing their prices to counteract the increases.
"In simple money terms, its a negotiation between you and the employer, what's the price of the job". Martin Levin encouraged contractors to "raise your prices between 20 and 30 percent" to nullify the changes to the rules.
Mr. Levin stated that the changes are to maintain a steady flow of tax from self-employed workers rather than waiting an entire year for tax payments. The accountant pointed out that if taxes are mispaid in future, the HMRC "can go back to the very top to get money owed".
Nigel stressed that changes like this could lead in a drop off in work for freelancers whereby the company employing these workers won't see the benefit of paying the taxes of these people and also risk penalty if the payments aren't made correctly. The reforms, according to Nigel, could lead to companies saying "I can't be bothered with this".
Martin Levin is an accountant and can help with any questions regarding IR35 reforms at https://www.martinlevinabc.co.uk/