Self-employed workers ‘undermined’ by IR35 despite restrictions being eased – review urged | Personal Finance | Finance
IR35 tax changes were introduced in early April which impacted contractors and self-employed workers across the UK. Despite the arguably detrimental changes, self-employed prospects have improved recently and the industry is set to recover well over the coming months.
New research from the Association of Independent Professionals and the Self-Employed (IPSE) showed almost a quarter of freelancers (24 percent) reported their businesses returning to pre-pandemic levels, while nearly a third (29 percent) predict the easing of restrictions from tomorrow will give an added boost to their businesses.
Nearly a fifth also (19 percent) said their businesses had been largely unaffected by the pandemic.
This research tallied in with IPSE’s latest Confidence Index, which found highly skilled freelancers’ average earnings had risen 20 percent in the last quarter – back to pre-pandemic levels.
It also showed their confidence in the performance of the UK economy over the next 12 months had risen dramatically in the last quarter to the highest level since Q4 2015, before the EU referendum.
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Where freelancer performance had not returned to pre-pandemic levels, 19 percent expected to do so over the next six months or so.
IPSE went on to cover what difficulties may lay ahead for the self-employed sector.
It detailed: “Of the significant proportion of freelancers (57 percent) whose business performance was still adversely affected by the pandemic, however, 40 percent said they feared it would take over a year to return to pre-pandemic levels.
“The ongoing damage to their businesses may be compounded by other factors, as nearly four out of five (79 percent) said they were concerned about the impact of IR35 on their business and over a third (37 percent) said they were still worried about the impact of Brexit on their business.
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“Freelancers also had many continuing concerns about the impact of the pandemic, with 51 percent saying they were worried about finding work or clients, over a third (37 percent) saying they were worried about reduced demand for their services and one in five (21 percent) expressing worry about increased competition from other freelancers.
“Over a third (36 percent) also said they were concerned about the possibility of a third wave.
“Just under a quarter (24 percent) said they were worried about the health impact of having to commute to client premises, almost a fifth (17 percent) said they were worried about the level of on-site protection available and a further fifth (20 percent) said they were concerned about stress levels and their mental health as the economy opens up.”
Andy Chamberlain, a Director of Policy at IPSE, responded to these findings and called on the Government to take action.
He said: “This research shows that despite the remaining challenges, many freelancers are seeing a big boost to their businesses because of the Roadmap and the opening up of the economy.
“Always at the leading edge of the economy, many freelancers are raring to go and ready to drive the recovery.
“It is not an entirely positive story, however, as there are still many freelancers whose businesses have not only not yet recovered – but are being held back and undermined by the changes to IR35.
“And, as we have seen in recent news, this has pressed many into working through as yet still drastically underregulated umbrella companies.
“To unleash the full economic potential of the sector, there is a clear need for Government to look again at the damage done by the pandemic – particularly the issue of debt relief – and also the impact of the IR35 changes, and consult on a long-term plan for the future of the freelance sector.”
As it stands, self-employed workers can seek state support through SEISS.
The fourth set of SEISS grants can be claimed up until June 1.
Following this, fifth sets of grants will be issued over the autumn months.
Full details on SEISS rules and eligibility can be found on the Government’s website and impartial guidance can be soug