Local government analysis seen by the Guardian expresses alarm about the changes, warning that the new “two-tier” system could lead to many workers terminating work for the public sector and creating a major skill shortage in critical areas.
The IR35 changes do not affect employees on the payroll but will apply to agency workers in the public sector, including those in the #NHS, councils, armed forces, police, Transport for London, schools and further and higher education establishments. The tax changes will not apply to the same workers doing the same or similar jobs in the private sector.
The documents warn that the reforms could lead to many of these workers deserting the public sector in favour of private employment, where the changes will not apply. Experts add that councils may have to fork out additional pay to prevent staff from leaving crucial roles after the changes are introduced on 6 April.
According to internal local government analysis seen by the Guardian, planned changes to the IR35 tax system could see agency workers supporting frontline government services lose up to 30% of their take-home pay.
Tax changes to be introduced in April could see hundreds of thousands of public sector workers lose up to 30% of their salary, sparking an exodus from already struggling sectors such as social care and the NHS.