IR35 for the private sector concerning for UK contractors

IR35 for the private sector concerning for UK contractors

ContractorUK has revealed research highlighting how the introduction of IR35 in the private sector has been considered by UK businesses

In the Budget last October, Philip Hammond announced that the rollout of IR35 into the private sector would be delayed until 2020—this was welcome news to UK businesses.

Nonetheless, new research revealed by ContractorUK has shown that many UK contractors remain concerned about the implementation of this legislation.

65% of UK contractors who took part in ContractorUK’s have admitted to being “very concerned” about IR35 being introduced to the private sector.

“Businesses must educate themselves on IR35 legislation and ensure they do not implement a blanket IR35 inclusion without taking into consideration the impact this will have on both their business and contractors.”

The IR35 legislation will affect all UK contractors that HMRC has deemed to not qualify within the self-employed status bracket.

Anthony Sherick, managing director of ContractorUK, said: “Rate increases could partly compensate for the new IR35 landscape. However, the increased burden of compliance and administration added to the sector is likely to be a big cost to companies and hiring contractors.”

For contractors who fall within IR35, they can therefore expect increased taxation, as well as National Insurance liability.

“One in five current UK contractors think they will be forced to leave contracting for a permanent role post-April 2020, due to the serious impact the new legislation will have on their livelihoods.”

 Some of the most notable results ContractorUK has provided includes the following:

  • 65% of UK contractors believe their income will decrease following the introduction of IR35 in the private sector.
  • 80% believe businesses will not understand how to implement the new rules effectively in the private sector.
  • 62% have predicted that “blanket IR35 inclusions” when contracting job specifications after April 2020 will result in significantly higher tax liabilities.
  • 52% believe that the introduction of IR35 in the private sector will result in companies being unable to deliver on key projects. For example, digital transformation or post-Brexit contingency plans.
  • 46% of UK contractors who took part in ContractorUK’s research have admitted that they plan to wait and see what the “initial consequences” will be for the wider contracting market before making a final decision as to whether to remain in the contracting industry.

“Businesses must educate themselves on IR35 legislation.”

The report added: “One in five current UK contractors think they will be forced to leave contracting for a permanent role post-April 2020, due to the serious impact the new legislation will have on their livelihoods.”

“Businesses must educate themselves on IR35 legislation and ensure they do not implement a blanket IR35 inclusion without taking into consideration the impact this will have on both their business and contractors,” said Sherick. “To do so would be to the detriment of individuals, flexible working, and productivity in the UK economy.”

He concluded: “It is strange that, given the issues in the public sector with IR35, questionable HMRC policies are prioritised above that of the government’s fundamental objective for economic growth.”

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