There is a genuine place for the self-employed tradesperson in the 21st century
5 min read
20 February 2017
Last week Matthew Taylor, CEO of the Royal Society for the Encouragement of Arts, Manufactures and Commerce, embarked on a tour for his review of employment practices. After my experience at the Court of Appeal, I’m looking forward to talking with him – that includes the topic of the self-employed tradesperson.
To me, Taylor seems like a decent bloke and someone I’d love to sit down and chat to about the self-employed tradesperson, and as part of his independent Modern Employment Practices Review.
I couldn’t agree more with him that the system by which we tax work is ‘very complicated’, and in many ways represents a code of practice based on 20th century conditions, attempting to deal with the realities of 21st century social and employment practices. The grey areas are causing confusion for employers and employees and there’s no doubt in my mind the system is failing.
Over a week ago I lost a legal battle in the Court of Appeal, brought by one of a former self-employed tradesperson, Gary Smith. After taking advantage of being self-employed for six years, earning £80,000 per annum, Smith wanted to be an employee and receive all the benefits that come with that, including holiday and sick pay. Talk about wanting to have your cake and eat it!
The biggest problem here is the assumption that businesses like Pimlico Plumbers, who pay self-employed individuals in this way, are short changing HMRC with tax arrangements, shafting the contractors in the process because the status denies them employment rights. That may be true in some well-publicised cases, but it’s certainly not in mine, and I can’t be the only one.
Over the years, hundreds of self-employed tradespeople working for my company have paid for their houses in just a few years, something that would have been impossible on wages as employees earning £40k a year. Yet whilst one man decided he wanted employment rights, hundreds of other self-employed tradespeople, making good money from Pimlico Plumbers, are not crying ‘exploitation’, but are worried that the good times might be coming to an end.
In fact, talk about the law of the unintended consequences! It would seem quite a few self-employed tradesmen want to join Pimlico Plumbers and benefit from the perks such as the 24/7 staff gym, subsidised canteen and, of course, the opportunity to tap into the huge number of customers jobs we get in and the more-than-decent income they can generate. Our recruitment team have never been so busy and have been swamped a massive increase in enquiries!
As to the claims that HMRC are being short changed, well, if you do the maths, which I’m sure they have done, you’d find that 20 per cent of the £100k that my tradespeople earn, is far better for the tax man than a marginal 24 per cent, £9,600, on PAYE that the same tradesman would be paying if they were taking home £40,000 per annum as an employee.
Taylor quoted the chancellor when he said that the rise in the ranks of the self-employed had impacted on the tax take of the exchequer. Despite the example above, this could be true, but only if the alternative to self-employment was paid work as an employee. The reality is that self-employment spiked during the recession, due to unemployment, and the real counterfactual for the exchequer was paying an unemployed person a benefit!
So yes, it’s complicated, and looking at his comments and track record, I’m certain that Taylor completely gets it and is not going to be dragged into the populist and trade union inspired dogma that self-employment is only used by companies intent on screwing those doing the work, and ripping off HMRC.
I think there is a genuine place for the self-employed tradesperson in the 21st century UK economy, and I would very much like to add my input from 40 years in the plumbing industry to Taylor’s very timely review.