Independent workers are prepared to move overseas when IR35 changes arrive, despite restrictions that Brexit might bring
There aren’t many people in the UK who think that working and living in Europe post-Brexit will be as easy as it has been in recent years. Anyone considering a career outside the UK faces a lot of unknowns and would think twice about doing it, you might assume.
Not so it seems, according to contractors recently surveyed by Qdos. The majority don’t sound deterred by the potential fallout from Brexit. They feel so strongly about the negative impact of recent and incoming IR35 reform on their earnings that many are considering moving overseas to continue working independently.
Prior to the Chancellor confirming further IR35 changes in the Budget, 58% of more than 1100 UK contractors said they believe better opportunities exist abroad due to the chaos and uncertainty surrounding the legislation – it’s fair to conclude the damaging effects of public sector changes in 2017 will have influenced this attitude.
Apprehension about Brexit (which only 11% of contractors believe will end in a beneficial deal for UK business) and what could result in a frostier relationship across the English Channel might not stop independent workers either. That so many contractors could move to escape what they see as a misguided tax regime tells us a lot about the current mood of hostility towards IR35 changes.
Independent workers have sent a powerful message to the Government; ‘if you won’t look after us, then we’ll live and work somewhere else’. But is this surprising? It shouldn’t be, after years of neglect from an administration that promises to support the independent workforce but has ultimately let it down.
Of the contractors thinking about leaving the UK, 57% said they would do so when IR35 reform is enforced in the private sector. 12% would remain on these shores until they are caught by IR35 (assuming that happens), 19% would head abroad in under a year, while a further 12% see themselves going in twelve months or more.
By the looks of it, this isn’t an empty threat or bravado either. One contractor, who asked to remain anonymous, believes it’s the sensible thing to do. And he hasn’t much sympathy for HMRC, suggesting the taxman only has himself to blame.
“Without a shadow of a doubt, if IR35 starts to impact my bottom line, I will be taking flight and relocating my business. The upshot is the taxman could end up losing far more than he thinks he could gain.”
In the current economic climate, the Government would be wise to start listening to contractors. The UK needs their contribution more than ever. Just recently, economists predicted that Theresa May’s Brexit deal will see the UK take a 4% hit to GDP in the long term.
Private sector companies should also take this seriously because just like the Government and the public sector, they rely on the flexibility and expertise of the independent workforce. When reform is introduced in 2020, these businesses must be able to show contractors they are capable of administering IR35 fairly and accurately. Anything less will drive these workers away.
It doesn’t sound like contractors will wait around. According to this particular individual, who already has an offer on the table, the opportunities abroad will remain irrespective of the final Brexit agreement.
“I’ve had offers to go and work in Stuttgart. A lot of the real estate has been leased by British banks and financial institutions hedging their bets against a bad Brexit. So there is a growing demand on the continent for IT contractors who are native English speakers.”
This sentiment is echoed by Reuters, that reports financial institutions have and will continue to engineer moves away from the UK.
“Brexit will slowly undermine London’s position. Global banks have already reorganised some operations ahead of Britain’s departure from the European Union, due on March 29.”
From the survey, it looks as though contractors are prepared to move with them. Although, when the UK’s transition period out of the EU is over at the end of 2020 and freedom of movement potentially stops, it remains to be seen how this will work in practice. Visa-free travel for business purposes has been discussed, but as is the case with the Brexit deal itself, nothing is set in stone.
However, independent workers are readying themselves nonetheless, explains this contractor, who has run out of patience;
“The whole thing (IR35) is an utter shambles from an IT contractor’s perspective. We are expecting that we will be taxed like employees but can’t enjoy any of the benefits of permanent employment. It will be bon voyage from me and I know there are a lot of other guys who are seriously looking into this.”