Reuters faces freelancer backlash over UK tax changes - FT
Tuesday 18 February 2020
Dozens of freelance workers at Thomson Reuters are threatening to leave unless it guarantees their pay will not fall due to a UK government crackdown on tax avoidance, the Financial Times reported.
Changes to the off-payroll working rules, known as IR35, will come into force on 6 April - the start of the next UK tax year - in order to tackle what the government’s Revenue & Customs department calls “disguised employment”.
The reforms will require all medium and large companies to assess the employment status of any contractors they hire who use limited companies. Companies and their recruitment agencies will be liable for any unpaid income tax and National Insurance contributions if they wrongly classify workers as self-employed.
The media sector, along with other industries that rely heavily on freelance labour, has been scrambling to respond to the complex rule change, the FT said.
Contractors at Thomson Reuters said the group had yet to tell individuals whether they would be transferred to the payroll after April and have demanded assurances in a letter sent to management last month and seen by the FT.
The freelancers claim that, if they are transferred, their pay will fall. “If deemed inside IR35, freelance workers in Reuters’ TV newsroom are expected to lose at least 45 per cent of their gross pay,” the letter said. “As it stands, we will no longer be able to afford to continue our work at Reuters. We must now make a choice between affording our homes and bills, or continuing to freelance at Reuters.”
The freelancers’ group said the 45 per cent figure was inclusive of 20 per cent income tax, 12 per cent employees’ national insurance contributions and 13.8 per cent employers’ national insurance contributions. In limited companies, contractors pay themselves through a combination of salary and dividends, paying tax at a corporate rate which is lower.
The letter, which was signed by 30 freelance television journalists and producers, sought explicit guarantees from management that freelancers would not have to pay employers’ National Insurance if they are told to join the payroll.
It also demanded that, if deemed an employee, Thomson Reuters pay holiday pay and pension contributions for affected workers on top of their day rate. Alternatively, the contractors said they would accept a 35 per cent increase in the day rate to offset the extra costs of joining the payroll.
“[This] could make a huge difference to the impending walkout and loss of vital newsroom workforce, which would heavily impact the quality and quantity of stories which Reuters’ clients receive,” the letter said.
One veteran freelancer who works for Thomson Reuters said workers felt humiliated by a lack of communication with management, the FT said.
“Thomson Reuters has never wanted to take responsibility for its freelancers,” they said. “All we’re being offered is … a big question mark.”
Thomson Reuters declined to comment on its plans, or confirm how many freelancers were going to be affected by the changes to IR35.
“Reuters is required to comply with IR35 legislation and is working with staff to ensure this is done in a collaborative and fair way,” a spokesperson said.
Dave Chaplin, chief executive of the ContractorCalculator advice website and a campaigner against the IR35 reforms, said the case was an example of freelancers engaging in collective bargaining.
“It appears the contractors at Reuters have teamed up and are engaging in collective bargaining to pre-emptively push back against any anticipated attempt by Reuters to push their new tax bill of employers’ National Insurance on to them by way of a renegotiated reduction in rates.” ■
- Financial Times