Nearly half, or 49%, of contractors in the UK were concerned that there will be further reforms of Off-payroll legislation (IR35) in the future, causing more uncertainty, according to a survey of contractors with over five years’ experience from digital payroll solution for contractors Cool Company.

The survey also showed that 50% of contractors raised concerns about the potential cost implications of an IR35 repeal or further reforms. 

Last month,  Chancellor Jeremy Hunt announced that he would scrap a planned repeal of the IR35 reforms (Off-Payroll) which came into effect in April 2021. The announcement came less than a month after the repeal was announced by the previous Chancellor, Kwasi Kwarteng, in the Mini Budget 2022.

Cool Company’s research also found that contractors in the older age bracket (55-64) voiced worries about material shortages (31%), labour and material costs (27%), health and safety (27%), and late payments (27%). While younger contractors (25-34) shared concerns about late payments (19%), poor cash flow (26%), and finding new clients (24%). Meanwhile, 19% of the younger contractors were also worried about finding ways to work around IR35 legislation and any potential changes to the legislation. 

According to the research, during the last 12 months, 76% of contractors have considered or are still considering leaving contracting, including 85% of those in the transport and logistics industry, and half (50%) of all 55 to 64-year-olds. Cool Company said this could leave an enormous skill shortage in a range of industries. 

Cool Company’s Country Manager, UK Kris Simpson, said, ‘According to our research, right now, UK contractors are working an average of 58% of their contracts within IR35 and more than half (54%) say their client charge rate has increased in the last quarter. Although the initial implementation of the Off-payroll legislation was not without its pain points, it is no longer the primary concern for contractors as it stands. It now seems the uncertainty surrounding future changes to IR35 and worries such as cash flow, finding new clients, and general economic concerns have become the greatest priority for many.”

‘Although the proposal to repeal the Off-payroll legislation came with the best of intentions for the economy, it, and any future revisions, can only cause further disruption to the industry,” Simpson said. “There are better ways to support businesses and their workers through this difficult economic period than once again changing the rules they have to work with.”