Westminster Diary: Tax policy rebellion wasn’t to happen
- Credit: HM Government
Welcome to my Westminster diary. Each week, I’ll be giving a behind-the-scenes take on what life is really like as a new MP. From jeering and bobbing, procedures and prayers, I’ll be lifting the lid on the mother of all Parliaments. Think ‘The Thick of It’ not ‘House of Cards’! - St Albans MP Daisy Cooper
This week, MPs discussed the Finance Bill: an opportunity for the government to renew or amend annual taxes and introduce new tax proposals. Two tax policies that are having a grossly negative impact on thousands of contractors were under the spotlight.
Our first vote was on the scandal-hit “loan charge”. Under some job payment schemes freelancers and self-employed contractors were paid via a third party with loans, replacing part or all of their salary. Last year, that pay suddenly became taxable, landing some people with life-altering tax bills of five figures going back 20 years. Already seven suicides have been linked to it.
The second vote was on “IR35”: a tax law aimed at preventing workers who are effectively employees from being paid like contractors to reduce their tax. Although well intentioned, the IR35 law has come in so hard and fast that many companies have stopped using contractors completely, pulling the rug out from under legitimate workers. As such, many professional bodies have criticised the legislation as “a sledgehammer to crack a nut.”
One amendment was designed to restrict the loan charge to cases where the taxpayer knew the loan was taxable. Raised eyebrows rippled through the corridors when we learnt that the Speaker wouldn’t allow a vote on this at all. Instead, MPs were only granted a vote on a “review” of the loan charge and then also to delay the introduction of the IR35 legislation.
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With a small but vocal rebellion brewing amongst Conservative backbenchers, for a few moments, it felt like a government defeat was tantalising close. We shuffled through the voting lobbies - now beeping our security passes on electronic card readers to record our votes. But the rebellion wasn’t to be.
Now, thousands of contractors will pin their hopes on the House of Lords who will consider the Bill next. Let’s hope the unelected second chamber does the right thing, before sending the Bill back to MPs for a final vote.
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You can contact Daisy via firstname.lastname@example.org