MPs demand end to loophole that lets strikers get tax-free payments

Tory MPs demand end to tax loophole which allows strikers to receive tax-free payments from their trade unions’ collective £100m war chest

• Tory MPs demand loophole that lets strikers receive tax-free payments is closed
• Treasury rules state union payments to members who walk out are not taxable 
• At least 22 unions have political or strike funds worth more than £100m in total

Tory MPs last night demanded a loophole that lets strikers receive tax-free payments from a £100million union war chests is closed.

Treasury rules state payments made by trade unions to members who walk out are not taxable.

But ministers are under pressure to change the law to top up public coffers and make it fairer for those who stay in work as the country braces for a winter of industrial action.

Figures show that at least 22 unions have amassed political or strike funds together worth more than £100million – half of which belongs to the Royal College of Nursing (RCN).

The 21 other unions have political funds that were worth a total of £52million in 2020/21 – an increase of 24 per cent in a year, according to Government analysis.

Figures show that at least 22 unions have amassed political or strike funds together worth more than £100million – half of which belongs to the Royal College of Nursing (RCN)

The funds can be used for political campaigning, but some unions use them to support members on strike, most to the tune of about £50 a day.

Last night Tory former leader Sir Iain Duncan Smith led calls for the Government to change the rules so the payments can be taxed.

He told the Daily Mail: ‘All earnings should be taxed. Perhaps the Treasury could review the status and explain why this peculiar set of earnings is not taxed as a matter of principle.’

He insisted: ‘If they are paying them for a day that they are not working in their company, and the union pays them then they should pay tax.’

Julie Lennard, chief executive of the DVLA, told a committee of MPs how some of the Government agency’s workers who went on strike during the pandemic received more money than if they were working

A Treasury insider said it would be ‘straightforward’ to change the tax rules at a Budget. Former prime minister Liz Truss had pledged to stop members receiving tax-free payments from their unions on strike days during the summer’s Tory leadership campaign.

But her successor Rishi Sunak has not yet adopted the plan. Earlier this week, Julie Lennard, chief executive of the DVLA, told a committee of MPs how some of the Government agency’s workers who went on strike during the pandemic received more money than if they were working.

She said: ‘The union paid staff to take action and in fact because we have a lot of staff who are part-time, there is a flat payment and it is not taxable income so people were able to take home a higher amount than they would if they had been working.

‘So it was very much an incentivised action and it was promoted by the union internally as that.’

Tory grandee Sir Geoffrey Clifton-Brown, who was on the committee grilling the DVLA boss, told the Mail last night: ‘The law should definitely be changed – why should somebody go on strike and actually be better off than working normally? People who are working normally get taxed, so why should people who go on strike be better off? I just think it is unfair.’

Former prime minister Liz Truss had pledged to stop members receiving tax-free payments from their unions on strike days during the summer’s Tory leadership campaign

The RCN, which yesterday announced its members will stage their first national strike on December 15 and 20, has increased its strikes fund by £15million – bringing the total to £50million.

Other health unions are also balloting workers for industrial action, while ambulance staff in Scotland are due to walk out on Monday.

A ballot among hundreds of thousands of Unison members closed yesterday, and one among Unite’s NHS members will close next week.

Midwives and physiotherapists are also voting on strikes, and a ballot of junior doctors will open in the new year.

Unite has some £20 million in political funds, Unison has £18 million and the GMB union has £1.2 million, according to their accounts.

Rail unions, some of which also have large political funds, do not give strike pay.

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