Contractors believe changes to IR35 will limit public sector innovation and reduce competitiveness, according to a new survey.

Survey results

Harvey Nash Recruitment surveyed 269 contractors back in March.

According to the survey’s primary findings, this is what contractors think of the reforms:

  • 82% were scared that the UK public sector would become less of a competitive proposition.
  • 64% expressed concern over the potential impact on innovation.
  • 64% were fearful that changing their tax status to the same as salaried workers would make it harder for public agencies to attract/retain top-level contractors.

As a result of these changes, 25% of contractors were prepared to start looking for work in the private sector.

However, 60% predicted that the same model would also be rolled out across the private sector.

What are the new reforms?

As of 6 April, public sector organisations have assumed responsibility for calculating how limited company contractors should be taxed.

This marks a significant break from the previous system. Under the old rules, contractors were encouraged to declare themselves as ‘outside’ of IR35, and to carry out their work in a way that didn’t risk them being thought of as permanent staff.

Many public sector workers have predicted a mass walkout of contractors as a result of these changes.

Get the support of a specialist contractor accountant to help you make sense of what these changes might mean for your contractor finances.

Call on 3 Wise Bears for more timely accounting advice for contractors.