A recent survey has revealed that the majority of contractors say that tax policy changes have been the most damaging factor to their financial wellbeing this quarter.
According to the IPSE Freelancer Confidence Index survey, after the IR35 reforms on the private sector in April 2021, confidence in the UK economy over the next 12 months ended up falling significantly from 22.8 in Q2 to -13.2 in Q3.
As many as 35% of contractors have left the self-employment sector due to the IR35 changes.
The survey did show some positive data, revealing that day rates have increased considerably across the board – for example, the average day rate charged by self-employed professionals over the last three months is £537, which is up from £397 in Q2 2021.
Fifty-one per cent of contractors believe that this figure will continue to rise over the next 12 months.
Derek Cribb, CEO of IPSE (the Association of Independent Professionals and the Self-Employed), said, “While headlines continue to focus on the pandemic, Brexit and supply chains, it is clear from the IPSE Confidence Index that there is only one issue dominating the lives of freelancers: IR35. The changes to tax rules in the private sector in April have sown seeds of doubt and uncertainty into the UK’s self-employed, with a significant number abandoning contract work altogether.
“While it is promising to see increases in day rates, quarterly earnings and work, without changes to IR35, self-employed workers won’t receive the benefits of their hard-earned work. Clearly, the government needs to re-evaluate the IR35 rules in light of the disruption and uncertainty they are causing business.”
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