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New IR35 survey results suggest likely ‘exodus’ of UK contractors

The changes to ‘off-payroll’ tax rules that are set to take effect in the UK from 6th April are already catastrophically impacting on the situation of many independent professionals and the country’s contracting sector in general, according to fresh research.

Despite the British government moving to soften the upcoming IR35 reform in the private sector by confirming that it would now only apply to payments made for services provided from the April commencement date, the changes have continued to attract widespread criticism.

Such critics include respondents to a study reported by Personnel Today and other media sources, indicating that as many as half of contractors will soon be leaving clients as a consequence of the controversial reform – potentially amounting to a £2.2bn hit to the economy. This figure was calculated by the company carrying out the survey, on the basis of the numbers of contractors leaving, the length of time that will be required to replace them, and the average day rate.

The findings suggest dire implications for independent professionals

Not only did the survey – which quizzed nearly 1,500 self-employed workers – discover that the wider contracting sector in the UK could be plunged into disarray due to the changes, but it also heard from contractors who told of the detrimental effect the reform had already had on their personal circumstances and mental health.

23% of those surveyed, for instance, said they had been “banned by clients without assessment”, while 28% were still waiting to learn of their status; a mere 9% had been deemed to be outside the scope of IR35.

No less worryingly, nearly a third of contractors – 31% – said the situation was affecting their mental health and leaving them anxious. With almost one in 10 of those questioned choosing self-employment in the first place as a way to cope with their own disability or illness, there is understandably great concern among these workers about the consequences for them of any change in circumstances.

15% of respondents said they were either in the process of selling their property or were on the verge of defaulting on their mortgage – a saddening illustration of the toll the reform appears to be taking on contractors, even before its start date.

One participant in the research described themselves as “very stressed, depressed and demoralized”, while another said they were “treated like a criminal” and were considering early retirement.

We’ll guide you through whatever difficulty – and opportunities – may lie ahead

As an independent professional who may frequently move across borders, you are likely to greatly appreciate all of the informed assistance you can receive to ensure you enjoy the optimal tax arrangements, while also always remaining on the right side of the law.

Whether you are set to contract in the UK, France, Germany, Spain, Turkey, Saudi Arabia or in any of a broad range of other markets for specialized talent in the months to come, we can help you to ensure the highest standards of international tax compliance. Call +44 (0)203 829 7221 or send us an email to discuss your situation and concerns with our seasoned expert advisors.

 

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