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IR35 reforms

Contractors Increasingly Fearful Of Public Sector Jobs Due To IR35 Reforms

With only a month to go until the tax changes are introduced, our long-standing view that the IR35 reforms are set to cause significant problems in the public sector, has only been reinforced with each new piece of research or significant news report on the topic.

The latest example is this week’s Guardian story, which reported that internal government analysis shows thousands of public sector workers could lose up to 30% of their salary when IR35 is introduced.

Prior to this story, Contractor UK reported on a survey by the business solutions company Qdos, which found that 85% of contractors plan to leave the public sector in response to the IR35 reforms.

The survey, which was conducted among 2,000 contractors, marks a significant increase on the 54% of contractors who said they planned to move out of the public sector in response to the reforms when IPSE conducted a study last year.

This suggests that the more contractors learn about the reforms, the more inclined they are to consider leaving the public sector altogether.

With the Qdos research coming out before the Guardian report, it’s clear that contractors don’t need to see government analysis to know that the reforms make working in the public sector, particularly through a personal service company, significantly less attractive.

Furthermore, the results being generated by the governments’ new Employment Status Service online test have further added to the confusion surrounding government workers and IR35 rules.

Despite being widely expected as a tool to help government workers determine their IR35 status, from initial tests it seems that the online test doesn’t actually feature any reference to government contracts and fails to cover key areas of employment case law. Instead it looks solely at traditional IR35 focus points such as the right to substitution and working hours.

Additionally, with answers left open to interpretation rather than the letter of a contract, and a significant number of contractors receiving an ‘unknown’ status results, the tool fails to provide any certainty to an already frustrated market.


Worried about your income going down?

Here at Contracting Scout, we recognise contractors play a valuable role in the public and private sectors and we want them to continue to do so.

That means we’re on hand to offer advice and support to ensure contractors don’t need to leave the public sector altogether, despite the ill-conceived nature of these reforms.

We’d recommend all contractors who might be affected to begin renegotiating a new contract immediately, whether this is with an agency or public sector body.

We’re also compiling a full IR35 guide, explaining what the reforms mean and how these might affect you. In the meantime, we’re offering contractors a free 10-minute consultation.

During this, we’ll look at the likely impact to your take home pay and will discuss how you can avoid falling into the IR35 trap unnecessarily. If this is of interest, please call 0203 6031878 or email [email protected].