Half of UK contractors plan to quit sector due to IR35 reforms

With IR35 changes set to take place next month, as many as 50% of self-employed workers have said they’ll stop contracting once the legislation comes into effect.

The only factor that will change some of their minds is if they can get contracts that are unaffected by the IR35 changes.

According to the IPSE research, those who have said they’ll stop contracting will instead:

• Plan to seek contracts abroad (24%)
• Stop working altogether (12%)
• Seek an employed role (17%)
• Retire within the next year (11%).

Worryingly, as many as 24% of contractors said that their clients were planning to blanket-assess all their self-employed workers as ‘inside IR35’; 21% said that they will only take on umbrella company contractors and eight per cent plan to stop working with contractors altogether.

Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), commented, “The pandemic has done disproportionate financial damage to the self-employed sector: after this, it simply cannot take the added hit of the changes to IR35. This research shows that not only are a large proportion of businesses not ready for the changes: many others are responding by either ceasing to engage contractors altogether, or forcing them inside IR35 or into umbrella companies – both of which will slash their incomes. 

“It is not surprising, therefore, that so many freelancers are reconsidering their prospects in the UK workforce – either planning to close their businesses or take them overseas. In recessions more than any other time, the UK needs its freelancers: their innovation and dynamism have historically always been the kickstarter to get the economy out of downturns. 

“Pushing ahead with the IR35 changes now would undermine this vital sector just when the UK economy needs it most. Therefore, for freelancers, the businesses that engage them and for the UK economy, we are urging the government to delay and rethink the changes to IR35.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.