Impact of IR35 reform begins to show

Travel and Subsistence alone caused 1,131 UK PSC’s to go into liquidation

Recent Government insolvency statistics revealed that changes to Travel and Subsistence alone caused 1,131 UK PSC’s to go into liquidation in May and June of this year. It was also marked as the reason 1,796 PSC’s stopped trading in the same months of 2016.

Given we’re not long into IR35 changes, it’s perhaps too soon to gather an accurate figure on the number of contractors put out of business by reform. We are working hard to ensure that contractors can continue to work in the public sector compliantly, and enjoying great success. But we must wait and see to find out the long-term impact of public sector IR35 reform.

Prior to 6th April, the potential effect that public sector IR35 reform might have on contractor earnings was speculative. However, new research from CW Jobs has revealed the extent of the damage.

While there is no mention yet of contractors being forced to shut their companies down, 71% of 1000 contractors surveyed have experienced a downturn in earnings, which they feel is directly connected to public sector IR35 reform.

Nearly a third of those have seen an 11-20% reduction in income, while more than a quarter have seen a 21-30% decrease. 75% of those surveyed now view the private sector, rather than the public sector as their preferred place of work.

And while none of CW Jobs’ research is particularly surprising to those in-the-know, it should send a clear message to the Government that IR35 reform is impacting what has quickly become one of the UK’s most valuable economic assets; the independent workforce.