Freelancers ‘Kick Into Overdrive’ as They Prepare For IR35 Reform 

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Despite an uncertain business landscape continuing to hamper freelancer and contractor confidence, new research has emerged that shows independent professionals are actually working and earning more. 

On the face of it, IPSE’s quarterly Freelancer Confidence Index makes for rather worrying reading. It explains that as a result of IR35 reforms and the ongoing Brexit saga, independent professionals’ confidence in the economy has fallen to historic lows, both for the coming three months and the large part of 2020. In addition, freelancers’ confidence in their own businesses has dipped, also to a record low. 

But it’s not all doom and gloom. Far from it actually. Regardless of the challenges that IR35 changes and the UK’s eventual exit from the European Union both pose to contractors, in the third quarter of 2019 these individuals worked on more assignments and increased their fees. 

Contractors experience significant earnings increase

For example, freelancers reported to IPSE that their day-rate has, on average, increased from £407 to £447 when comparing it to the previous quarter. Meanwhile, the time spent ‘on the bench’ as contractors often refer to periods when they aren’t working, has decreased, dropping from 3.3 weeks to 2.5 weeks. This is the lowest level recorded since early 2017. 

This combination of higher day-rates and more time engaged in a contract has meant freelancers’ overall income has risen significantly in the past three months, from £20,480 to £24,139. 

Freelancers recognise upcoming challenges

You might be wondering what has caused this sudden and somewhat unexpected increase in earnings. Well, according to IPSE, independent workers are preparing for what they predict are difficult times ahead.

Specifically, freelancers and contractors identified ongoing economic uncertainty (69%), Brexit (65.9%) and government tax policy (63.5%) as the biggest factors impacting their own business. 

With Brexit expected to reach its conclusion before long, a general election next month and further reform to IR35 due to be introduced in April 2020, contractors realise these are testing times, explained Ryan Barnett, IPSE’s Economic Policy Adviser. 

“Freelancers blame three things for their worryingly low confidence: overall economic instability, Brexit and government tax policy – most likely the changes to IR35 due next April. This quarter, the sector seems to be gearing up for tough times ahead by working and earning more.”

Political parties urged to focus on contractors’ needs

As Westminster gears up for a general election on 12th December, politicians are hoping to win the support of the UK’s growing self-employed population. In order to do so, IPSE’s Ryan Barnett explained that political parties must focus on the key issues concerning freelancers and contractors.

“Parties across the political spectrum need to sit up and take note that freelancers and other businesses are still suffering under the weight of Brexit uncertainty. And for freelancers, this is compounded by anxiety about the disastrous changes to IR35 due to come into the private sector next April. Whatever government is formed after the election, it must act quickly to lift the weight of Brexit uncertainty and stop the catastrophic IR35 changes in their tracks.”

In the most part, freelancers and contractors have little control over Brexit, IR35 reform and economic uncertainty. But that’s not to say the 5 million people now working for themselves - many of whom have the drive and determination to face these challenges head-on - cannot continue to prosper in a difficult environment.

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