Data released by the Office for National Statistics earlier this month has revealed that the easing of lockdown restrictions has contributed to self-employed numbers stabilising. The data confirms that there are 500,000 fewer freelancers than the same time last year but that the total number had risen by 21,000 compared to the previous month. This is the second consecutive month-on-month increase in self-employed numbers since the start of the Covid-19 pandemic.
Analysis of the data indicates that there are 197,000 more people on payroll compared to the previous month. Freelancing association IPSE, has commented on this increase and strongly considers it is due to changes to the IR35 off payroll rules, leading contractors who are embarking on new contracts out of their limited companies and on to umbrella payrolls.
IR35 rules were updated in April 2021, and saw private sector companies that engage limited company contractors being made responsible for judging whether or not their contract was inside or outside IR35 rules. Previously this judgement was up to the individual contractor. Many contractors who have had contracts deemed to fall inside IR35 have had to consider alternative ways to receive payment for their contract work. Some agencies may have their own payroll arrangement for their contractors, but many operate a preferred supplier list of umbrella companies, which gives the contractor freedom to pick and choose between pre-vetted umbrella service providers.
An umbrella company solution takes all the uncertainty away from the rule changes but many personal service company contractors have seen their earnings drop significantly. It is understandable that, if they can, some contractors are holding out for a contract that is outside IR35 or taking time out to reskill or pursue other avenues. Some may never return to contracting in the UK, but it is early days and the fall out of Brexit and Lockdown restrictions on cross-border travel are not yet clear.
Early signs are encouraging and indicate that the freelancing market is recovering. However, contractors clearly require certainty and support in order to continue to make contracting a career, and offer British industry interim resource solutions to facilitate economic growth.
ContractingWISE has a wide range of options to help you keep your contracting career on track. To talk to a member of our team, call: 0203 642 8679