According to new research from the Association of Independent Professionals and the Self-Employed (IPSE), 50 per cent of UK freelancers plan to leave self-employment after the new IR35 rules come into effect on April 6 2021.
The 50 per cent figure is a considerable increase from 32 per cent last year (ahead of the original 2020 start date for the rules), which suggests that the impact of COVID-19 has also exerted a significant influence on contractors’ plans.
24 per cent said they would seek work abroad, while 17 per cent said they would look to take on full-time employment. 12 per cent said they would stop working altogether and 11 per cent said they would retire in the next 12 months.
Meanwhile, 8 per cent revealed that their clients would stop using freelancers completely due to IR35, while 21 per cent said their clients would only employ contractors through umbrella companies. 24 per cent said their contractors were planning on blanket “inside IR35” assessments of all freelancers.
IPSE Director of Policy Andy Chamberlain said: “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.”
