For 20 years, IR35 – the government’s off-payroll working rules – has been one of the great challenges facing contractors in the UK. In fact, IPSE was originally founded to represent and protect contractors in the face of IR35. And, although there are many other subjects we represent the self-employed on now, IR35 and freelancer taxation is still one of our most important campaigning areas.
It is therefore deeply concerning to us that, although our campaigning has secured important concessions and delays, the government is now determined to bring the damaging changes to IR35 into effect next month. As the legislation comes into effect, we have two key priorities: protecting our members and the wider self-employed community, and ensuring government understands the impact of the changes to IR35 on the self-employed.
The changes to IR35 shift the responsibility for determining IR35 status – effectively whether or not a contractor is deemed to be falsely self-employed and therefore should be taxed like an employee – from contractors themselves to their clients. If they do not get status decisions right, businesses face not only significant additions to their tax bills, but even fines.
As our research has shown, client businesses are responding with risk-averse decisions that are deeply damaging for contractors, with many making blanket inside-IR35 judgements, using umbrella companies or even ceasing to engage contractors altogether.
We are pushing hard to make government aware of this: not only have we shared these findings with ministers, MPs and government departments, we have also published it in the Daily Telegraph, the Financial Times and many other outlets. It’s vital that government understands the impact of these changes on the UK’s vital contracting sector.
We have campaigned long and hard against the changes to IR35, not only delaying them by years, but also securing crucial concessions like the Small Business Exemption. We have given evidence to government consultations and select committees, secured reviews of IR35 and raised awareness about these changes in the press countless times. However, the hard fact is that the government is determined to drive these changes through and – despite the financial impact of Covid – is refusing to delay further.
In the coming weeks, therefore, our key aims are twofold: tracking and publicising the impact of the changes and, crucially, protecting our members and the wider self-employed community. In terms of the first aim, please continue to write to your MP and encourage other contractors to do the same: it is crucial government does not pass these changes without understanding the impact on the contracting sector.
The changes to IR35 will affect how many self-employed people work and take on contracts with clients. But we are determined to protect and support contractors through the changes and in whatever ways they choose to work after the changes – whether inside IR35, through umbrella companies or outside IR35 with small clients.
Whether you are a member or not, you can access our updated IR35 guidance, covering how the changes to IR35 will affect the private sector, as well as some of the most commonly asked questions about the legislation. Our webinar series IR35: What you need to know is also free to join. Check our events page next week for the next in the series.
IPSE’s different levels of membership also offer crucial support and protection through the changes and afterwards:
Our tax and legal helplines can give you guidance on the IR35 changes, working through umbrella companies, inside IR35 status, ensuring contracts with small clients are IR35 compliant and more.
The changes to IR35 may be coming into effect, but the struggle to make freelancing fairer is far from over. For a long time, it has been clear that IR35 is a patch-up for a tax system that simply isn’t built with the self-employed in mind. This fundamental failure has led to a UK self-employment system that is too complex.
Government knows this – we’ve made sure of that. Now, our long-term aim is to drive a wholesale review and reform of self-employment and the tax system in the UK to make it work for employees and the self-employed alike. We need a simpler and fairer system – one that removes the need for IR35. IPSE may have been founded to combat IR35, but 20 years later our purpose is broader than that. As the only dedicated voice for freelancers, we are now working to not only combat IR35 itself, but to remake the ill-designed system that led to the legislation – and create a fairer landscape for freelancers across the board. That is our focus now. You can be sure we are working harder than ever for our members and the whole self-employed community.
Despite 20 years of tireless campaigning by IPSE, it is unfortunately now almost certain that the government is going to go ahead with the ill-advised rollout of this damaging legislation to the private sector in April.
Not sure if your contract is inside or outside IR35? One way to protect yourself is get your contract professionally assessed. Find out how today.
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