According to the latest research by the Association of Independent Professionals and the Self-Employed (IPSE), 35 per cent of contractors have left self-employment since IR35 regulations came into force for the private sector in April 2021.
Among those that have continued to be self-employed, 34 per cent say they now work through an unregulated umbrella company. 23 per cent of umbrella company contractors said they were dissatisfied with their arrangement, while 46 per cent said they were satisfied. The most common causes of dissatisfaction were no longer being able to claim expenses (55 per cent) and the cost of Employer’s National Insurance contributions (33 per cent).
36 per cent, meanwhile, are working through an “inside IR35” engagement, leaving them with few employment rights and potentially taking a significant toll on their take-home pay. 80 per cent of contractors working “inside IR35” say that their quarterly income has dropped. On average, quarterly earnings had declined by 30 per cent, while a quarter reported a drop of more than 40 per cent.
38 per cent of respondents said that they had not received the required Status Determination Statement (SDS) from clients confirming their IR35 status. 21 per cent said that clients had issued blanket assessments classing all contractors as “inside IR35” and 11 per cent said clients had adopted blanket bans on contractors.
IPSE Director of Policy Andy Chamberlain said: “Contractors are the most productive part of the crucial self-employed sector, which overall contributes more than £300bn to the UK economy every year. Not only that: they are absolutely vital for economic recovery, providing invaluable flexible skills to businesses getting back on their feet and adapting. But just when this sector is needed most, it has been hamstrung by the changes to IR35.”
“This research shows the devastating impact the changes to IR35 have had on contractors, needlessly compounding the financial damage of the pandemic and the unnecessary gaps in support. Now, just when contractors are needed most – amid mounting labour shortages across the UK and particularly in haulage – government decisions have driven out a third of the sector.”
