Research has been released which shows 70% of contractors went freelance to become ‘masters of their own destiny’, something the accountancy behind the insight, Integro Accountanting, predicts will continue to happen despite IR35 reform.
From next April, contractors will lose the right to set their own IR35 status, with medium and large firms in the private sector tasked with administering the rules. Regardless of this controversial reform, a similar version of which was enforced in the public sector in 2017, Integro is confident independent workers will carry on working this way.
The firm’s CEO, Christian Hickmott, did reference the unhelpful uncertainty in the contractor market – alluding to IR35 changes – but said there has been a structural change to the way people now approach work.
“Despite uncertainty in the contractor market, life still goes on. People are becoming more focused on the impact of how they work and the market is thriving with individuals who would much rather have greater flexibility and a work-life balance they control rather than jump back into permanent employment. I don’t expect this to change.”
That’s not to say contractors weren’t wary of IR35 changes. One independent professional surveyed by Integro spoke of being “very nervous about IR35 reform”, having “already felt a difference since the dividend tax rate changes two years ago.” This contractor also said changes to the legislation “could be the straw that breaks the camel’s back for me.”
However, the contractor accountancy is optimistic that the advantages of independent working will continue to attract people. Of the several hundred contractors who participated in the survey, 85% of whom are claiming day-rates between £300 and £800, benefits such as ‘greater flexibility’ and ‘greater take-home pay’, presumably compared to when working in employment, were the two biggest attractions. Contractors also mentioned that ‘no office politics’ was another reason they went freelance.
While IR35 reform has the potential to impact this flexibility and take-home pay – an issue the specialist accountancy is sensitive towards – Integro has said that should agencies and clients receive “further clarity and support on the subject, things should remain business as usual.”
Integro CEO, Hickmott, also had these words of advice for contractors, explaining: “Even with IR35 reform on the horizon, in my opininon, if you are genuinely in business for yourself, there’s nothing to fear from this legislation. It’s true you may need to educate your clients and or the fee-payer – the sooner you do this, the easier it will become to plan for your future.”
Do you plan to continue contracting once IR35 reform has been introduced in the private sector?