At least 50% of freelancers and contractors will continue to work independently, despite incoming changes to the way they are potentially taxed when working in the public sector.
Changes to IR35 in the public sector, which will see public sector employers deciding whether contractors sit inside or outside IR35 come 6th April, has raised fears among some over the very future of independent working.
Without the right to set their own employment status, unsurprisingly, a huge 95% of contractors surveyed by UK contractor tax advisor, Qdos Contractor, believe the benefits of working this way are being reduced.
That said, at least half of the 2,000 UK independent workers asked, were adamant they would ‘never go employed’, cementing the long-held opinion that worklife balance and more control over your career is just as, if not more important than taking home more money.
While a worrying 46% of contractors asked revealed they ‘would think about’ returning to, or going employed, just 4% were actually planning to give up their self-employed status due to looming changes to IR35 in the public sector.
“That by and large, a telling proportion of UK contractors are confident enough to say they’d never go employed is positive news, in what ultimately is a period of uncertainty for the sector,” explained Seb Maley, CEO of Qdos Contractor.
The survey did reveal however, that even though contractors are planning to remain self-employed, the public sector might not see the benefit. 85% would stop working in the public sector should they be deemed inside IR35, and caught by the new rules.
“Understandably, contractors are feeling threatened by incoming IR35 changes, with many planning to stop working on public sector contracts should they be caught by the new IR35 rules,” Seb Maley commented.
“With the right guidance and support though, the UK’s contractor workforce should be able to continue to benefit from working independently - and in the public sector - without the fear of wrongly being deemed inside IR35 by public sector clients.”
HMRC’s latest scheme to scupper ‘large scale tax avoidance’ among public sector contractors has not been a popular move to say the least.
IPSE’s CEO Chris Bryce, has been adamant in the past that along with the contractor workforce, the public sector itself will suffer. In a recent blog, he argued:
“This will not end well for the public sector. Our research has shown it will force over half of contractors out of the public sector while the rest increase their pay rate. So public sector organisations will not be able to attract the talent needed to get the work done, or they have to pay more to get it. It is likely organisations will turn to the ‘big four’ consultancies to fill the void and then the costs will really soar.”
What’s more, April 6th’s changes are simply thought to be a test-bed before the same initiative is rolled out in the private sector.
That the majority of independent workers are adamant that they will continue to work this way regardless of future IR35 changes is at least positive news for self-employment though, not to mention the UK economy.
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