From electricians to plumbers – hidden Budget tax raid on millions of workers, see if YOU’LL be hit

1 comment 1 Next A WAR on Britain’s white van men is under way as the Government plans a £1.3BILLION tax shake-up. The clampdown on honest grafters, hidden in Budget documents, could be disastrous for builders, sparkies and plumbers. Josh Toovey, of self-employment trade association IPSE, says: “We are genuinely worried some of these businesses won’t survive long enough to see the next Budget.” Here’s what Chancellor John Healey’s stealth attack means for you… Advertisement Sign up for the Money newsletter Thank you!

Email address Please provide a valid email. Your info will be used in accordance with our Privacy Policy You'll now receive top stories, breaking news, and more, straight to your email. What’s happened Self-employed workers like plumbers and builders could be hit by the tax Credit: Alamy From April 2029, self-assessment taxpayers who owe more than £1,000 in tax a year will be forced to make regular automated tax payments throughout the year.

To trigger a £1,000 tax bill, a self-employed person would have to be earning around £16,400 a year in profit after costs such as fuel and materials are deducted. Read more on Money LAST ORDERS Restaurant inside iconic UK landmark to close after 12 years BANKING ON IT Experts reveal maximum amount of money you should keep in your bank account The Government has not clarified how frequently workers will have to pay tax throughout the year but the move is expected to hit around three million people.

If monthly payments were demanded, someone earning £40,000 a year in profit would owe around £7,130 in income tax and National Insurance — around £600 a month. The shake-up is aimed at cracking down on the “tax gap” — the difference between what it is owed and what it is paid in reality — which is nearly £60billion a year. But the move is only expected to raise an extra £1.3billion for the taxman’s coffers in 2029/30 and £1.8billion a year by 2031-32.

Most read in Money HIDDEN DEPTH Four-bed home looks completely normal from outside… but has odd secret below BANKING ON IT Experts reveal maximum amount of money you should keep in your bank account CALL IT QUIDS Inside the rise & fall of Poundland - how fatal flaw DOOMED high street chain BIG DEAL All the stores already running Black Friday deals - including 50% off perfume Mandy Girder, from tax expert Blick Rothenberg, says the rule change reduces the risk of major tax losses, for example when a business goes bankrupt in between paying tax returns.

Advertisement Prime Minister Andy Burnham has committed to Labour’s manifesto pledge of not raising income tax, National Insurance or VAT, so the taxman must think outside the box to generate revenue. From July 2029, HMRC will also get new powers to recover lower-value debts from those who have failed to pay their bills , by getting it direct from their bank accounts. This will hit self-assessment workers from 2030. The Government should raise an extra £50million in the 2029-30 tax year, £255million in 2030-31 and £320million in 2031-32.

Reform’s Treasury spokesman Robert Jenrick also believes workers could end up paying tax on money they don’t even earn. Advertisement Writing in The Sun, he said: “Labour’s plan would make the self-employed pay tax monthly or quarterly — based on what the Government expects them to earn, not what they actually make. “So if they lose work, or a client does not pay, they could end up with the taxman chasing them for money they never had.”

Experts warn of ‘stealth tax’ Workers could be left out of pocket by the new tax rules Credit: Alamy The Treasury is insisting that workers will not pay more tax, they will just pay it earlier. But Nimesh Shah, of Blick Rothenberg, describes the new rules as a “stealth tax” because self-employed workers will have to pay sooner, potentially leaving them out of pocket. Currently, you pay tax twice a year in two lump sums — one by January 31 and one by July 31.

Advertisement So, many people put their tax money into a savings account to earn interest between these times, but more frequent tax payments would make this harder to take advantage of. That savings pot is also vital to tide you over in quieter times. Mr Shah adds: “The Government can say it is not increasing tax, but bringing forward payments improves its cashflow at the expense of workers’ cashflow.” Trade bodies warn that tradespeople may not be able to cope.

More than half of small businesses in the UK saw a fall in revenues in the third quarter of this year, compared with the previous three months, while almost nine in ten reported higher operating costs than a year prior, says the Federation of Small Businesses. Advertisement Brian Berry, from trade body the Federation of Master Builders, says: “It has the potential to be a crunch point. Builders will be facing their usual tax bill, while also having to pay up for the new system.

“If payment comes in late or they get most of their work over the summer , this will really pile the pressure on.” IPSE has warned that some of its members may not be able to survive financially. Mr Toovey says: “Our research shows a third of self-employed people have less than three months of essential living costs set aside in savings. “With costs continuing to rise and household budgets under pressure, many are running out of room to absorb another hit.”

Advertisement But you can help to limit the damage by saving now. Transfer money into an easy-access savings pot whenever you get paid — and make this your tax pot. On £40,000 of profit, you’ll pay roughly 18p out of every pound of profit in income tax and National Insurance. But, among other costs you can set against tax, be sure to claim every single business mile. From April next year, HMRC will allow tax relief of 55p per mile for your first 10,000, then 25p a mile after that.

Advertisement RECOMMENDED STORIES The Government was contacted for comment. 'Good for the accountants, bad for us' By Alun Palmer JAMES Graham, who runs Oakwood Builders & Joiners with his dad, is braced for pain when the new £1,000 tax rule hits. He says: “It looks like it is good news for accountants and bad news for us – we will be paying them all year round. “At the moment we plan and budget for the end of the tax year. It is all accounted for.

“Taking amounts throughout the year when we don’t know the exact figures will be tough.” James, 24, below with dad Philip, says his firm, along with others he has spoken to in the area, had suffered the worst year in living memory. He is bitterly disappointed the Budget offered little to help him with soaring costs. James, of Skegness, Lincs, says: “Increasing the minimum wage sounds good in a cost-of-living crisis. But it makes it much harder for businesses to employ people.

“It’s more expensive and less affordable to create new jobs if you want to grow your business.” He runs a fleet of six diesel vans and on Thursday it cost £250 to fuel two of them. He says the decision to freeze fuel duty and keep the 5p discount will do little to help him in reality. 1 comment 1