The Reform UK leader’s vow to scrap IR35 faces scrutiny as his own £430,000 GB News earnings raise questions about personal gain. With Labour watching closely and contractors caught in the crossfire, could Farage’s financial arrangements undermine his tax reform crusade?
Reform UK doubles down on IR35 abolition
IR35 specialist Qdos has commented on Reform UK leader Nigel Farage appearing to ‘double down’ on his pledge to scrap the controversial off-payroll working rules, known as IR35 reform, if the party were to come into power.
In a speech this week, where Farage abandoned several of his party’s recent promises to cut tax, he maintained his view on IR35 and has been quoted as saying:
They are embattled by IR35 regulations designed by the Treasury and weak Conservative chancellors who assume that everyone out there who isn’t working for a big firm is some kind of crook. Well, I’m sorry, but the IR35 rules are ridiculous. They’re stifling innovation. They even drive some in their fifties just to throw their hands up and go into early retirement.
IR35 debate gains political momentum
Qdos CEO Seb Maley commented: “Farage and, in turn, Reform UK have doubled down on their view of IR35. The conversation around IR35 and, in particular, the reform, is gaining momentum. Both the Conservatives and Reform UK have made their feelings clear recently. Now, it’s Labour’s turn.”
Maley continued,
These rules have left thousands of contractors in a situation where they are given no choice but to pay employment taxes, despite being genuinely self-employed. As Farage points out, it’s forced many into early retirement – that or leaving the country, meaning nobody wins.
“While it’s easy to make these kinds of promises while you’re not in power, they do cast the spotlight firmly on IR35. With the Budget looming, this is food for thought for the Labour government, which has an opportunity to explore ways to make these rules simpler to navigate, both for contractors themselves and the businesses engaging them.
Farage’s GB News earnings in the spotlight
As much as freelancers and the solo self-employed may agree with Farage’s stance on abolishing IR35, reports of the Reform UK leader benefiting personally from the party’s manifesto pledge to abolish anti-tax avoidance regulations could be just the ammunition the Labour Party needs to keep IR35 in law as is.
Labour could argue abolishing IR35 would be a simplification of tax legislation, which could put fewer limitations on Farage’s work at GB News as a self-employed contractor.
Farage has been paid nearly £430,000 from GB News since September 2024 for about 100 hours’ work, the register of interests shows. (Source: The i Paper).
The news report stated: “Corporation tax on those earnings would be about £107,000. If he had paid income tax, he would have been liable to pay about £193,000, so this arrangement saves about £86,000.”
Understanding IR35 Rules and their application
Off-payroll working rules, also known as IR35, may apply if a worker provides their services through their own intermediary, which is usually a limited company, according to HMRC.
The rules apply if the circumstances are such that, if the services were provided under a contract directly between the client and the worker, the worker “would be regarded for income tax purposes as an employee of the client”, the legislation states.
Whilst there is no suggestion of rule-breaking by Farage at the time of writing, or whether IR35 rules would apply to his GB News arrangement, experts, according to the i Paper report, said the regulations for self-employed contractors are something he likely has to take into account in his financial planning.
Farage is wrong. IR35 was introduced in 2000. It was a Labour government (not Conservative as Farage suggests) initiative in response to the then perception that individuals were using companies to avoid employment taxes. IR35 is hard to criticise in principal, which is why successive governments won’t scrap it. The problem with the rules is the difficulty in distinguishing between genuine business arrangements and pure avoidance arrangements, so prejudicing genuine businesses, particularly sole traders operating through companies, and Farage is right to that extent. Despite all the criticisms over the years, no one has yet come up with a suitable workable alternative. Perhaps now is the time for such an alternative to be devised, albeit in the face of the Treasury view that Chapter 10 (deemed employee rules) has been a success.