The government must stop the widespread blanket assessments on IR35 contracts, says the Association of Independent Professionals and the Self-Employed (Ipse).
Almost 75 percent of contractors are worried that IR35 legislation will change again, while others said they don’t understand it altogether.
A different study by the umbrella firm, Cool Company, shows only 43 percent of IR35 workers understand the changes.
What is concerning to HR teams is 14 percent of contractors said they felt less secure since it has come into place. Meanwhile, more than 45 percent say clients are unwilling to engage with a complex system.
Jobseeker’s market
Earlier research has shown that jobseekers have an advantage since the pandemic, and are unworried about finding work.
This is boosted by employers, who have increased salaries by 20 percent since the pandemic to attract skilled staff.
Ipse, meanwhile, found many contractors are not happy with new challenges of working with umbrella companies.
This includes difficulty setting up pension arrangements and inability to claim expenses.
Does IR35 make it easier to find work?
Conversely, however, there is a general consensus that the new legislation does make it easier for contractors to find work.
55 percent of respondents said they feel they can get a bit more work since the introduction of IR35.
Cool Company’s Head of Business, Kris Simpson said: ‘Any change in working practices carries the potential to disrupt workflow and incur costs. With many professionals working to a competitive margin, any additional costs could be damaging for many.’
In Ipse’s research, most are happy with payment timings and communication but unhappy with the new costs.
One contractor working under an umbrella company told Ipse:
“I’m much worse off, tax is eye watering and on top I pay an apprenticeship levy and employer’s NI which is a kick in the teeth.”
Freelancers refuse contracts under IR35
Ipse found 31 percent of freelancers refused a contract because it was under IR35, while 14 percent of freelancers moved over to permanent employment. Other are either working on an agency payroll or have closed their companies.
This is another worry for HR teams who might need to employ people for short contracts. Especially as more than a third of freelancers have left contracting over the last year.
Twenty four percent of freelancers also told Ipse their clients are going to put all new contracts under IR35.
The number of blanket assessments to avoid HMRC fines is concerning freelancers and has resulted in Ipse calling for the government to review the impact of off-payroll working on both contractors and HR teams.
Feyaza Khan has been a journalist for more than 20 years in print and broadcast. Her special interests include neurodiversity in the workplace, tech, diversity, trauma and wellbeing.
- Feyaza Khan
- Feyaza Khan
- Feyaza Khan
- Feyaza Khan
