The Association of Independent Professionals and the Self-Employed (IPSE) has released its latest Freelancer Confidence Index for the third quarter, showing that confidence among the UK’s self-employed workforce has fallen from 22.8 in Q2 to -13.2 in Q3. The IPSE Freelancer Confidence Index polls more than 754 members of the IPSE and PeoplePerHour regarding the state of freelancing in the UK.
Following optimism in Q2 driven by the relaxation of pandemic-related restrictions, the impact of IR35 rules, which came into force in April 2021, has affected freelancer confidence. 70.8 per cent of freelancers polled said that the biggest impact on their financial well being in Q3 had been the introduction of IR35 reforms. 64.2 per cent, meanwhile, said that their business performance had been negatively affected by government regulations over the hiring of self-employed workers, while 63 per cent cited the ongoing impact of the pandemic.
Despite this, the survey also revealed increases in both freelancer day rates and the amount of time that the self-employed work. Average day rates over Q3 stood at £537, compared to £397 in the second quarter. Meanwhile, the number of weeks freelancers spent not working fell to 3.1 weeks, the lowest average number of weeks not worked since Q4 2019.
These increases have seen a sharp rise in average quarterly earnings, which rose from £18,652 in the second quarter to £24,606 in Q3, the highest average quarterly earnings figure since Q4 2018.
IPSE CEO Derek Cribb said: “While headlines continue to focus on the pandemic, Brexit and supply chains, it is clear from the IPSE Confidence Index that there is only one issue dominating the lives of freelancers: IR35. The changes to tax rules in the private sector in April have sown seeds of doubt and uncertainty into the UK’s self-employed, with a significant number abandoning contract work altogether.”
“While it is promising to see increases in day rates, quarterly earnings and work, without changes to IR35, self-employed workers won’t receive the benefits of their hard-earned work. Clearly, the government needs to reevaluate the IR35 rules in light of the disruption and uncertainty they are causing business.”
