According to the latest survey of freelancers in the UK, confidence among the self-employed has plummeted as the effects of IR35 rules begin to be felt. The most recent Freelancer Confidence Index from the Association of Independent Professionals and the Self-Employed (IPSE) shows that the rating of confidence among UK freelancers fell to -13.2 in the third quarter, from Q2’s score of 22.8.
In the index, which surveys over 754 IPSE and PeoplePerHour members each quarter, 70.8 per cent of respondents said the introduction of IR35 rules for private sector companies in April 2021 was having the biggest effect on their finances.
Derek Cribb, CEO of the IPSE, commented: “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.”
Other factors that the self-employed were concerned about included government regulations surrounding the hiring of freelancers, cited by 64.2 per cent of respondents, and the COVID-19 pandemic, which 63 per cent said was a concern.
However, Q3 also showed major increases in the average day rates freelancers are charging and the amount of time they spent working. While Q2 had average day rates of £397, this rose to £537 in Q3, while the average number of weeks not worked in the quarter fell to 3.1, the lowest figure since Q4 2019, before the pandemic hit.
This helped to drive a significant increase in average earnings over the quarter, rising from Q2’s £18,652 to £24,606, the highest quarterly figure for close to three years.
Derek Cribb said: “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.”
Author: Steven English