According to a new survey from digital contractor payroll firm Cool Company, the impact of IR35 is continuing to make contractors consider leaving self-employment a year after the reforms were implemented. However, the survey also revealed that the situation has improved considerably in the past year.
Initially, up to eight out of ten contractors said that they felt leaving self-employment was the only way around IR35. In the latest research, however, 41 per cent of respondents reported feeling this way, with many freelancers and businesses that engage contractors seemingly having adjusted to the rules.
39 per cent of contractors in the latest study say they are no longer considering leaving the self-employed sector, with 21 per cent saying that had never been an option. 37 per cent of respondents, meanwhile, said their experience of the first year since IR34 reforms came in had been positive, with just 20 per cent saying that it had been negative.
70 per cent said they had considered working through an umbrella company to navigate IR35, but only 30 per cent say they actually followed through with this. 29 per cent, meanwhile, said they had not considered using an umbrella company.
Contractors said that 59.4 per cent of their work within the last year had been classed as inside IR35. Regarding work that they had completed prior to the reforms, respondents felt that 55.45 per cent of work would, on average, now be classified as inside IR35.
Kris Simpson, Head of B2C Business UK at Cool Company, said: “While it is obvious that IR35 is continuing to affect the working lives of contractors and the businesses they serve, it is encouraging to find that the impact hasn’t been as devastating as originally predicted. Although almost half of all contractors are still clearly experiencing a difficult time.”
“Finding new ways to provide their services is the key for contractor success. This might be changing their client base, so that they work only with the smaller businesses not included in the reform. Working with overseas clients, beyond the reach of the legislation. Or finding clients through an umbrella company.”
Simpson added: “With contract workers playing such an important role within the UK’s economy – 980,000 temporary workers on assignment every day during 2020 – it is integral that we find ways for them to thrive while adhering to IR35. So, perhaps more help needs to be given to the 41 per cent of contractors still considering leaving their profession.”
