According to a new survey by tax and contracting consultancy Qdos, 82 per cent of contractors say that they should have employment rights when they are deemed to be working inside IR35 and, as a result, are liable to pay employment taxes.
Zero rights contract work involves a contractor who has been defined as “inside IR35” (meaning they pay income tax and NICs for the work they do) and pays PAYE but is not granted typical employment rights like sick pay, maternity and paternity pay or holiday pay.
According to the Qdos survey, around 65 per cent of contractors are classed as inside IR35 by their employers, which could mean that thousands of contractors are currently working, or could potentially work, in zero rights employment.
The problem is particularly challenging for freelancers as an inside IR35 status often means that they are taking home up to 30 per cent less in income. As a result, the government is being urged to end zero rights employment.
Qdos has suggested that, while it is highly unlikely that IR35 will be abolished, the government could instead act to ensure inside IR35 contractors are granted employment rights by aligning tax status with the UK’s employment rights.
However, the organisation notes that, despite the issue of zero rights employment being raised by the government in February 2018 at the Employment Status Consultation, the three years since have seen very little progress made on the issue.
Qdos also suggests that action could have been, but wasn’t, taken prior to the private sector introduction of IR35 in April of this year, at which time there was a considerable increase in contractors deemed inside IR35.
Author: Steven English