A new survey shows 72% of contractors have not made any preparations yet for the IR35 changes coming in in April.
The majority of the UK’s self-employed workforce is unprepared for the upcoming changes to off-payroll working rules – IR35 – which come into law in April, according to new research.
The research, based on a poll of over 500 self-employed workers by EY TaxChat, found that only 3% of self-employed individuals believe the forthcoming changes to the IR35 tax regime should go ahead in April, while 44% think the Government should delay the changes and 72% of impacted contractors have not yet made any preparations ahead of the deadline.
From Tuesday 6th April 2021, IR35 rules on off-payroll working will extend to the private sector. The Government says fines for IR35 mistakes will not apply in the first year unless they are intentional.
Mark Lee, UK EY TaxChat Leader, said: “The implementation of the off-payroll working rules have been postponed once already, yet we are still in a position where many self-employed individuals appear to be in the dark. With the new rules coming into effect from early April, it is now a matter of urgency for those affected to understand how they may be impacted – not only form a tax perspective but in terms of earnings and cash flow.”
Many self-employed individuals are heading towards the 6th of April without the requisite knowledge of any potential impact the changes could have on their employment and earnings. Of those surveyed, more than a third (36%) said they had not heard of the changes, while 31% said they are aware but do not understand how they might impact them and just 14% claimed to be up to date with how it might affect them. Just over three in ten (31%) respondents claim they will not be impacted at all.
Only 32% of contractors have taken action so far, with most of those speaking to a tax adviser (11%) or researching on the internet (11%), 4% having spoken to HMRC, a further 4% having spoken to their clients (4%) and just 2% speaking to their recruitment agency.
When asked what emotion, if any, people associate with IR35, apathy lead the response (47%), followed by confusion (27%), anxiety (18%) and stress (18%), and 17% say it will decrease their income.