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ir35 survey results

Contractors Walk Away From IR35

Earlier this month, Contractor Calculator published their findings from a survey of over 1,500 contractors looking into the impact of recent legislation changes. The results show that the HMRC’s reforms to IR35 in April have, not surprisingly, come at a huge cost to the already struggling public sector.

 

Since the reform went live, 27% of contractors have left the public sector. This has sent ripples across the industry, with three quarters (76%) of departments or projects facing workforce shortages causing seven in ten projects to be delayed. While some only saw a few members of their team leave, 24% lost at least half of their contractors and a significant number (7%) lost almost all of them.

Most worryingly, of those that left – only 15% left because their project came to a natural end. Other contractors offered to stay with a pay rise (around 13%) but were refused and 20% were told they had to switch to an umbrella company alternative so they left, but the vast majority (61%) simply decided to leave rather than be deemed to be operating inside IR35.

44% of contractors who did carry on working for the public sector were able to operate outside of IR35. But a large proportion (32%) were forced to move to using an umbrella company without seeing a rise in their rates.

Long term, the report found that a staggering 98% of contractors will never work in the public sector again unless they can either work outside of IR35 or if the Government pays the extra tax.  And one fifth (21%) have now entirely ruled out working in the public sector, leading to fears over a public-sector brain drain and organisations struggling to replace critical contractor skills.

 

The report in full can be viewed here.

 

As we said in August, it’s important we keep challenging these reforms. IR35 has been a worrying topic for months now. In fact, Qdos Contractor found it was the top concern among contractors.