Despite the rising cost of fuel bills, more than one-third of contractors surveyed by IR35 insurance provider, Qdos, named off-payroll tax legislation as their biggest concern of 2023.
Of the 700 contractors that were asked what the key issues impacting independent working in the UK are for the year, 36.2% listed IR35 as their biggest fear even though the UK is experiencing a 41-year inflation high and a raft of tax changes to be introduced in the 2023/24 tax year.
Of those taking part in the Qdos Annual Contractor Survey, 31.7% said the cost of living crisis is their primary concern, while 25.2% flagged incoming tax increases.
A majority of contractors (61.1%) also described IR35 as the biggest contributing factor to poor business performance in 2022.
While 80% of freelancers said they were able to secure a contract outside IR35 last year, a 15.4% increase when compared to 2021, nearly half (44.3%) said this was difficult to achieve.
And more than half (61%) of those surveyed said that securing work outside the scope of IR35 legislation will not become any easier this year.
Off-payroll legislation was reformed in the private sector in April 2021 and makes all medium to large-scale businesses responsible for determining the IR35 status of contractors they hire.
Qdos chief executive Seb Maley, said: “There is a cost of living crisis happening, yet IR35 remains contractors’ greatest fear for the year ahead.
“Whichever way you look at it, the introduction of the off-payroll working rules has made operating outside the scope of IR35 more difficult for genuinely self-employed contractors.
“True, most contractors were able to secure contracts outside IR35 last year. This is hugely positive given that the vast majority of contractors, in our view, belong outside IR35. But there’s clearly still a lot of work to be done, particularly by businesses.
“Far too many have insisted that contractors operate on the payroll, regardless of their true IR35 status. This is a needless, expensive and sometimes even non-compliant approach to managing IR35.
“HMRC is making no secret about its increased IR35 compliance activity, either. This will no doubt play on the minds of contractors, and indeed businesses, which can also be hit with massive tax bills for non-compliance.”
Last year saw a series of U-turns on the controversial IR35 reforms with Liz Truss’ short-lived government aiming to scrap the controversial ruling, while Kwasi Kwarteng held the role of Chancellor.
When Jeremy Hunt took over from Mr Kwarteng, the move was overturned and it was confirmed the IR35 rulings would remain the same.
Despite the flip-flopping on legislation, Financial secretary to the Treasury, Victoria Atkins said: “The Government did not incur any additional costs as a result of the announcement of the repeal and subsequent reinstatement of the off-payroll working rules.”
Recommended for you
