New research has found that more than one in five UK freelancers are planning to seek work with overseas companies in the wake of the IR35 reforms to self-employed tax rules. The research, conducted by the Association of Independent Professionals and the Self-Employed (IPSE) in April, surveyed 1,500 UK freelancers, with 22 per cent saying they would seek overseas work.
IPSE Director of Policy Andy Chamberlain said: “The prospect of more freelancers taking their services abroad is bound to raise alarm bells for firms struggling with skills shortages and competition with rivals overseas. But most alarming of all is government’s decision to bury its head in the sand, rather than changing course and acknowledging the damage its own rules are inflicting on British businesses.
“IPSE warned government for years that its plans to reform IR35 would make being in business too difficult, and that many genuine freelancers would turn their backs on contracting in the UK as a result. Today’s findings, whilst concerning, are nonetheless unsurprising.
10 per cent of respondents, meanwhile, said that IR35 was the reason they were not currently working. 53 per cent said they had walked away from “inside IR35” contracts, while 62 per cent said that they planned to avoid such contracts in future.
79 per cent of freelancers affected by IR35 named it as being the most detrimental factor impacting their business performance. Responding to the findings, Andy Chamberlain said the government “must rethink its approach to IR35”, calling the rules “a huge hindrance to hiring and a drag on the prospects of hundreds of thousands of our smallest businesses.”
Chamberlain continued: “Freelancers and contractors are refusing to be corralled onto company payrolls. Instead, they are working with firms that respect their status as independent businesses, both at home and abroad.”
“Many others, however, felt that it made more sense to retire early, or stop working altogether, rather than carry on in an increasingly unfavourable environment for self-employment, overseen by this government. This is a damning legacy for a government which has prioritised labour market participation.”
