Can foreign HGV drivers save Christmas?
By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)
1 November 2021
Justine Riccomini sets out the benefit in kind implications for foreign HGV drivers and poultry workers coming to work in the UK on temporary visas.
Recruitment drive
The UK Government has made provision for employers in the UK to recruit up to 4,700 foreign HGV drivers and 5,500 poultry workers to work in the UK between October 2021 and February 2022 by way of temporary visas.
Agents may be presented with questions by employers who are looking to augment their HGV driver base for the period leading up to and just following Christmas 2021 to ensure their produce reaches the shelves for British consumers to do their Christmas and new year shopping.
It appears that HGV driver levels have been tailing off for over a decade. The typical HGV driver stats over that timeframe indicated a majority of white males in the 55- to 65-year-old age group. As time has gone by, the sector has largely failed to recruit new younger drivers due to unattractive rates of pay and long hours, and Brexit and the Covid pandemic have together done little to enhance recruitment prospects in the sector.
ICAS understands from anecdotal evidence that recruitment of foreign nationals has to be even more attractive than usual – and the cost to business of plugging the gap in HGV driver vacancies is high.
Attractive package?
Employers wishing to recruit foreign HGV drivers on to UK short-term contracts are finding themselves needing to offer an attractive salary and living accommodation package. The salary is subject to the usual payroll deductions, but there have been a lot of queries about the living accommodation. The drivers will be expecting to live in accommodation of a high standard and employers are turning to Airbnb and other providers to source suitable living accommodation for them to stay in when they are not driving.
ICAS sought clarification from HMRC on the subject following discussions on the benefit in kind implications for the drivers on Fixed Term Appointment arrangements and the Class1A NICs costs for employers. It seems that in spite of the government’s incentive to recruit foreign workers to plug the gaps, the follow-on consequences such as paying for living accommodation have been left untouched.
HMRC opinion
"Thank you for your query concerning HGV drivers working in the UK on temporary contracts and their accommodation.
You are right that the usual accommodation rules will apply to these individuals. As the drivers will be attending their UK workplace for a continuous period during the 3 to 6 months they are working in the UK, s339(5)(a)(ii) of ITEPA provides that the arrangement doesn’t qualify for relief under the existing temporary workplace rules. In these instances, the 24 month rule is overridden and the workplace is considered to be a permanent workplace. EIM32125 provides guidance on this fixed-term appointment rule.
If the accommodation provided does not constitute living accommodation (see EIM11321), then the provision will be caught by s201 of ITEPA instead.
Any changes to the workplace rules would be a matter for government and HMRC keeps all its tax reliefs under review to ensure that they continue to meet policy objectives. In this case, we do not think the current circumstances qualify for relief under the existing legislation.”
Conclusion
Employers who need to recruit foreign HGV drivers (and poultry workers) may be facing larger bills than ever just to make their packages attractive – with the overall burden likely to be transferred to the consumer. On occasion, it may be necessary for the employer to bear the tax cost of the living accommodation, which will add to the employment cost burden even more. It seems that the good intention of providing visas was not followed through by temporarily exempting living accommodation for those same workers.
If you wish to contribute to the debate…why not email the ICAs tax team on tax@icas.com, or start a conversation on CA Connect?