HMRC tax rules could push up temporary driver recruitment costs by 30%

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Fleets are facing increased temporary driver recruitment costs due to HMRC IR35 tax rules that come into force in April 2020 for the private sector, according to a new report by Driver Require.

As of April next year, companies with over 50 employees and an annual turnover of over £10.2m will be required by HMRC to assess the employment status of any contractor they use and this bring things in line with the public sector, which has been operating under the same rules since 2017.

IR35 has been designed by HMRC to make sure companies are paying employee taxes and not avoiding doing so by using self-employed contractors.

The “IR35 & its Potential Impact on the Temporary LGV Driving Sector” report from Driver Require, the driver recruitment specialist, predicts that maintaining driver pay, including agency margins, tax and National Insurance contributions will raise the cost of temporary drivers to businesses by around 20% and up to 30% for large volume contracts.

Kieran Smith, Driver Require chief executive, will be speaking on the impact of IR35 and other challenges facing driver recruitment at Fleet Live this year.

Fleet Live is the leading event for the fleet management community and gives decision-makers the chance to face future challenges and opportunities together with two days of learning, sharing and networking on October 8-9 at the NEC in Birmingham.

Smith said IR35 will force agency drivers currently operating as Ltd company contractors to move to PAYE (Pay As You Earn).

He said: “The increase in margins and shift from large volume, lower-variable contracts to lower volume, high-variability contracts means that most agency contract charge rates will rise.

“It’s not going to be easy for either fleet operators or agencies to absorb these extra costs.”

Smith is concerned that hauliers will be tempted to unlawfully continue using Ltd company contractors, supplied by disreputable agencies who are willing to take the risk to avoid the new tax rules.

He said: “This will undermine ethical operators and agencies.

“What we’re calling for in our report is an enforcement of the legislation and for the Government to clamp down hard on disreputable players.

“It’s only if this happens, and if agencies and their clients can work closely with each other to agree on new charge rates, that we’ll be able to quickly stabilise the market so that normal competitive operations can be re-established to the ultimate benefit of all parties.”

Driver Require and Hermes at Fleet Live 2019

Smith’s session at Fleet Live will set the scene to discuss driver shortages in the UK, how the industry can resolve the issue and how Brexit could exacerbate shortages and bring things to a crisis point.

Martin Colloff, Hermes UK head of client and network distribution, will also be talking about driver recruitment with an in-depth session on the challenges facing recruiting and retaining drivers in the commercial fleet industry.

This will include an overview of Hermes' heavy goods vehicle recruitment initiative and how the industry can attract more women to consider a career as a driver.

The ‘driver recruitment and retention in commercial fleets’ presentation will be held on day one of Fleet Live on October 8 at 11am in the Operations Theatre at Hall 20 of the NEC.

For more information on the full agenda and to sign up for a complimentary pass to Fleet Live head to

Plan your Fleet Live visit

When? 8-9 October, 2019

Where? NEC, Birmingham

Entry? Free! Secure your complimentary pass here