One in eight UK freelancers plans to quit by 2020

Date: 9 July 2019

Freelance workerA new survey of freelancers and contractors has found that two key issues - Brexit and IR35 tax reforms - are prompting many self-employed workers to rethink their futures.

The poll of 500 self-employed workers conducted by the Freelancer and Contractor Services Association (FCSA) in partnership with FreeAgent has found that 12% are considering closing down their business because of Brexit.

In addition, 13% of limited company workers say they are planning to stop freelancing and contracting when the off-payroll IR35 reforms come into effect in April 2020.

"If the impending losses from the self-employed pool due to concerns over the impact of Brexit were not significant enough, the additional loss of at least 13% of the limited company group of freelance workers due to off-payroll reforms will further restrict UK plc's access to the necessary skills to weather the country's ongoing uncertainty," said Julia Kermode, chief executive of FCSA.

"The very workers who traditionally prop up the economy in challenging times will simply not be there in sufficient numbers. From our respondents we know that 67% of those planning to leave freelancing due to off-payroll reforms have been in business for under five years. They are the new generation of agile entrepreneurs with all the skills we need in the future."

Other key findings include:

  • 44% of all self-employed workers think Brexit will have a negative impact on their business;
  • Just 8% think the impact of Brexit will be positive;
  • 61% of self-employed people under 30, and 58% of people aged 31 to 40 think Brexit will result in fewer opportunities for their business;
  • Only 29% of people aged 61+ share the same concerns;
  • 13% of all self-employed workers are looking for freelance work overseas in anticipation of a negative Brexit impact.

Julia Kermode said: "Our country is going through some tough times just now and the working landscape for our flexible talent does not look particularly rosy - our government needs to acknowledge that freelancers and contractors are key to our economy and need help, reassurance and certainty."

Ed Molyneux, ceo and co-founder of FreeAgent, said: "It's clear from our research that many freelancers and contractors across the country are worried about the impact that leaving the European Union will have on the UK. But in addition to having to prepare for potential hardships that Brexit could place on the economy - and, in turn, their own businesses - they are also facing the additional challenge of proposed changes to off-payroll legislation.

"Time and again policy-makers continue to ignore the fact that the self-employed have none of the employment rights or the security that comes with permanent employment. They seem to be intent on crippling what is a very important and growing part of the UK economy, at a time when the wider economic impact of Brexit will potentially leave many of these businesses at risk."

Also this week, a survey of over 1,200 limited company contractors by QAccounting and Contractor Weekly has found that 72% say they would stop working on a project if they were given an ultimatum by their client or agency to go PAYE or work through an umbrella company because of IR35 reforms.

"Contractors are proud to work independently and clearly plan on continuing to do so - but outside the scope of IR35," said Mike Butchart, ceo of QAccounting. "These statistics tell us that very few of these individuals want to become employees. As we approach next year's reform, this is a message that we urge recruiters and end-clients to listen to."

Written by Rachel Miller.