'Arcane tax rules silence vulnerable groups' - new research

People living in challenging circumstances aren’t able to have their say on services affecting them due to arcane tax rules, campaigners have found.

Many organisations such as charities, local government and universities work with people with lived experience of issues such as poverty and homelessness to shape and improve their services.

Best practice is that participants are paid for their expertise - and the government often mandates this to be the case, for example in the accreditation of university courses. [1]

However, research by the Austerity Action Group - which is funded by the Social Workers Union - found that over a third (35%) of people giving their advice and expertise through research and involvement opportunities said they accepted a reduced rate of payment for their time or only took expenses due to worries that remuneration for their expertise would affect their benefits or tax. [2]

In 22% of cases there was no payment made at all, which was more likely to affect those with a long-term health condition, disability, people of colour and other marginalised groups.

One respondent to the survey said: “Using lived experience is not cost free, either emotionally or physically. If I am making a contribution to a project I expect to be paid, just like all the other professionals or consultants around the table. There also needs to be payment for preparation, it is not easy just to rock up and share some very traumatic and discriminatory experiences about services.”

Another explained the impact of poor remuneration practices: “I have previously had to declare my earnings from such involvement, which then affected our family income, and my mental health because of the stress of worrying about whether and how much my benefits would be affected. My disabled daughter had similar issues, and we had to go through the process of getting her earnings recognised as therapeutic earnings, which I had to organise on her behalf.”

Meanwhile further responses highlighted the issue of organisations using claim forms in order to treat the involvement as an “expense”. They said: “I give a considerable amount of unpaid time to training healthcare professionals, trainee nurses, social workers, physios and dieticians. It takes a lot of time, particularly the preparation as I want to do a good job. I don’t claim because of the system of sending forms which I can’t access because I do it on my phone and I don’t have a printer.”

The research comes as a broad range of charities, campaigners and individuals have written to Rt Hon. Lucy Frazer QC MP, the new Financial Secretary to the Treasury, to ask for the Government to make two changes to tax rules to ensure that participating in research and involvement opportunities is exempt from tax.  [3]

Campaigners have also called for clarity that this earnings exemption also applies to income assessed for benefits thresholds.

Angi Naylor, a social worker and part of the Austerity Action Group, commented: “We rely on people with lived experience of issues to contribute to research and service development. It’s a key way that we can create new services or policy recommendations. But tax and benefit rules mean that these people aren’t being rewarded for their time and expertise - these people are experts through lived experience and should be treated as such.”

Dr Peter Unwin, senior lecturer in social work at the University of Worcester, said: “At the heart of the development of many university courses are the views and experiences of people who our graduates will go on to work with. It is essential that their voices are heard and that they are fairly remunerated for their expertise.”

“This research reveals why we are calling on the Government to make minor changes to tax and benefit rules to ensure anyone participating in research and involvement opportunities should be able to accept full payment for the expertise they bring to charitable and public organisations.”

​​John McGowan, General Secretary of the Social Workers Union (SWU), said: “The work of the Austerity Action Group is an important aspect to the campaigning work we do at SWU.

“There have always been complex difficulties for organisations to pay people with lived experiences for their time and expenses and who take part in co-production / participation activities without them losing out on their entitlement to benefits.

“The research highlights this and further interventions are required so not to penalise the very people who are needed to shape services and offer advice and participation.”

[1] Best practice as quoted by, for example: National Institute for Health Research: https://www.nihr.ac.uk/news/nihr-launches-new-centre-for-engagement-and-dissemination/24576

[2] Over summer 2021, the Austerity Action Group collated responses from 64 respondents, covering 95 experiences / organisations. The Austerity Action Group is funded by the Social Workers Union and made up of practicing and retired social workers.

[3] Letter text

Dear Ms Frazer,

As a nation, we rely on public and charitable services to meet our educational, health and social care needs.

Increasingly, government is rightly mandating the core inclusion of citizens’ experiences and views if these essential services are to be allowed to operate. This includes the design of qualifying courses for doctors, nurses and social workers, council services and other charitable activities.

However, government rules freeze people with lived experience out of providing their time and expertise in the development of these vital services.

Arcane tax rules and complex benefits regulations mean that it is difficult for charities, local government, universities and other providers to remunerate people who want to help shape and improve services.

A recent survey of those taking part in these research or involvement opportunities found that accepting a lessened rate of payment or only accepting out of pocket expenses, happened to over a third (35%) of respondents.

In 22% of cases, there was no payment made at all.

For those that didn't claim for payment, respondents told us this was because they were worried it would affect benefits or tax.

Those who have a long-term health condition, disability, people of colour and other marginalised groups are more likely to have had no payment at all.

These findings mean that the government vision of truly diverse citizen involvement, and its potential to improve services and education,  is not being realised.

We call on the government to make simple, but vital, changes:

- Make two minor alterations to tax rules to ensure participating in research and service delivery, training and charitable activity consultations are explicitly exempt from income / PAYE tax. (This involves extending for exemptions on declarable income contained in EIM71005 and clarifying the wording of EIM71100).

- Ensure there is clarity for all DWP / job centre / benefits staff that this earnings exemption also applies to income assessed for benefits thresholds.

While a third of respondents (37.5%) contributed monthly or more regularly, most (71%) earned less than GBP500 for their contribution. Therefore, the costs to the Exchequer are minor, but the impact on those with lived experience and the improvement of public services will be significant.

We urge you to consider making this small but vital reform in the forthcoming budget statement.