• Could Brexit and tax reforms be the end of freelancing?

    New research shows a worrying trend for the future of freelancing. 

    Findings from a report by the Freelancer and Contractor Services Association (FCSA) and FreeAgent show that almost half of all self-employed workers think that Brexit will have a negative impact on their business, compared to just eight per cent who think it will be positive. 

    The report also found a worrying number of freelancers will consider leaving self-employment when the changes to IR35 come in next April.

    No ideal solution for freelancers

    Over half of people aged 31 to 40 think Brexit will result in fewer opportunities for their business. Brexit could also drive freelancers overseas, with 13 per cent of them looking for contracts in as they anticipate the negative effects of Brexit.

    For some, Brexit could mean an end to freelancing entirely. The research found that more than one in ten self-employed workers are considering closing down their business because of Brexit.

    Unsurprisingly, it is the younger generations who are most concerned about the impact of Brexit on their ability to work. Over sixty per cent of freelancers under 30 believe Brexit will result in fewer opportunities for their business. In comparison, less than 30 per cent of people aged over 60 share this concern.

    A young woman is using engineering equipment in a workshop. She is wearing a protective mask and gloves as well as blue coveralls.

    IR35 threatens STEM and innovative occupations

    As well as the threat of Brexit, one in eight limited company workers are planning to stop freelancing when changes to IR35 are applied to the private sector in April 2020.

    Perhaps most worryingly, STEM occupations could be the worst affected. 82 per cent of those who said they will leave freelancing due to the combined threat of Brexit and IR35 legislation are male, which is worrying considering men make up a large proportion of STEM fields. “The UK already has a shortfall in these areas”, argues Julia Kermode, chief executive of the FCSA, “we cannot afford to lose them.”

    The new generation of agile entrepreneurs are also looking to leave freelancing. Julia says: “from our respondents we know that 67 per cent of those planning to leave freelancing due to off-payroll reforms have been in business for under five years. 

    “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.”

    Young freelancers have the skills and drive we need to be successful as a nation

    A worrying trend

    The research certainly demonstrates a worrying trend: the most innovative and crucial sectors of the freelance economy could be at risk. Ed Molyneux, CEO of FreeAgent, added: “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, policymakers 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.

    “I believe we need to be nurturing and encouraging this sector and, in particular, the younger cohort of the UK’s freelancers and contractors. They are the generation of business owners who have the skills and drive we need to be successful as a nation, regardless of when – or if – Brexit takes place.”

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