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Contractors outline plans for life after IR35 reform

Freelancers and contractors weigh up their options

Individuals impacted by incoming IR35 reform have had their say on unpopular changes to the legislation, with half of contractors stating they will only continue working this way if they can find projects to which the off-payroll working rules do not apply.

One in two contractors could quit

According to IR35-lobbying body, IPSE, that surveyed its members, the potential impact of reform is so great that it could halve the size of the UK’s independent workforce. In addition to the one in two contractors who will quit if they cannot find outside IR35 opportunities32% will stop contracting in the UK regardless. Of this figure, 13% have said they will source contracts abroad, while 11% expect to stop working altogether or retire early. The remaining 8% are considering a move into permanent employment. 

Contractors fear risk-averse IR35 decisions

Judging by this survey, contractors’ plans will be largely dictated by how their clients react to private sector IR35 reform, which is to be enforced on 6th April and will see medium and large businesses start administering the rules.

When focusing on how businesses might manage the changes, 39% of contractors have said their clients will no longer engage contractors outside IR35 full stop. 20% explained their engager will make blanket inside IR35 decisions, which are not compliant given they lack ‘reasonable care.’ 14% of independent workers have been told they must work through an umbrella company where the IR35 rules do not apply. 13% of contractors are expected to go PAYE, while 11% of freelancers who do not think they will be able to work outside IR35 from April onwards have predicted that their client will ban independent workers entirely. 

Rights must be offered when inside IR35

Unsurprisingly, nearly all of the contractors surveyed (97%) said they are either fairly or very concerned about reform to IR35 in the private sector. The vast majority (92%) are also of the view that working inside IR35 and paying employment taxes but not receiving employment rights in return is unfair.  

You can read IPSE’s report ‘IR35 in the private sector’ in full by visiting the association’s website here.

By Contractor Weekly

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6 thoughts on “Contractors outline plans for life after IR35 reform”

  1. Bob
  2. Tom

    Saw the writing on the wall a while back, have left contracting entirely because zero trust in HMRC.
    Result: less money for me, less tax for HMRC, less self-employment for the country, more wondering why.

  3. Biggles

    I will now be taking semi retirment. Waiting for the LC and IR35 has made me realise the Government is not serious about looking after freelancers. I’m out of this rat race and will do something different.

  4. John

    My options are limited but my actions or lack of them will be endless.
    Deemed unfairly inside. Permanent role offered with salary less than 50% current rate, go umbrella and risk being retrospectively hit for unfair tax. PAYE with zero rights on a new contract is the only option. I work on projects where design and construction use up all the time and commissioning are meant to work long hours to recover the schedule….well guess what, 8 hour days and ‘zero good will’ are the new norm for commissioning…longer projects, longer and more delays, less motivation, more resources needed – bigger cost to client.

  5. Phil

    I wonder if the govt has calculated the 170k PSC VAT revenue losses, I pay on average net 6k/qtr, thats 24K PA, times by 170K thats 4bn. It reckons it will net 2.9Bn. VAT depends on middle men, they are about to kick 170K into touch.

  6. Shaz Khan

    ON the one hand the Tories claim for a bright future post Brexit.

    On the other they are smashing the spirit of innovation, small business and freedom.

    For contractors factor in Lack of Pension, Sick Pay, Holidays, quite periods the only reason you become a contractor is for better work life balance.

    No coincidence the new chancellor who has come from no where is the son of one Infosys Billionaire who has the most to gain for this policy. Shocking beyond belief.

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