A new survey from IR35 insurance provider Qdos has found that contractors consider the IR35 rules, which came into force for private sector businesses in April 2021, to pose the biggest threat to their sector in 2022. IR35 rules mirror the regime that came into effect for public sector organisations in 2017 and saw the responsibility for determining IR35 status move from contractors to the businesses that engage them.
In an effort to avoid the complex determination process, many businesses have adopted blanket policies of either only engaging contractors working through umbrella companies or simply no longer engaging contractors at all.
The survey polled over 1,200 contractors and found that 61 per cent of respondents saw the rules as the biggest threat to their way of working. In comparison, the second most cited threat – the incoming increases to dividend taxes – were seen as the biggest threat by just 18 per cent of respondents.
Highlighting how serious the impact of IR35 has been for the UK’s self-employed workforce (which contributes more than £300 billion to the UK economy each year according to the IPSE), the regulations were cited as the biggest threat by ten times more contractors than both COVID-19 (6 per cent) and Brexit (6 per cent).
Seb Maley, CEO of Qdos, commented: “IR35 reform has created a plethora of challenges for contractors, jeopardising this way of working for thousands. The fact that contractors still see IR35 as the stand-out threat in 2022 – and by some distance – tells you everything you need to know about the journey ahead, along with the progress that needs to be made this year.”
“It’s important to highlight that more businesses are taking a fair and pragmatic approach to recent reform, signalled by the 83 per cent surge in contractors deemed outside IR35 since the changes were rolled out.”
“Even so, far too many businesses are insisting that contractors work on the payroll, regardless of their true IR35 status. Not only will this see businesses struggle to attract the flexible talent they need to recover from the pandemic, but forcing genuinely self-employed people onto the payroll will also result in significant and needless cost rises.”
