Freelancers negative about the year ahead

Freelancers expect government policy to drive their businesses and the economy into decline over the next year, according to a new report.

IR35 impacts on public sector


The report from IPSE (the Association of Independent Professionals and the Self-Employed) and PPH (People Per Hour) found freelancers’ confidence in their annual business performance dropped nine points this quarter, sliding into negative territory. Their confidence in the wider economy – which was already in deep negative territory – fell another two points to near-record lows.

IPSE says freelancers laid the blame on government fiscal policy, citing it above Brexit as the factor doing most harm to their business performance. It adds that this is most likely based on the widespread rumours when the survey was taken that the Budget would extend the changes to IR35 self-employed tax law into the private sector.

Freelancers’ low confidence was also exacerbated by a drop in both their day rates and their quarterly earnings. They saw their average day rates fall by £2 this quarter, after a drop of £36 in Q2. The demand for freelancers’ work also declined by 0.2 weeks since the beginning of the year, meaning their overall quarterly earnings fell even further. In Q3 2018, freelancers saw their average quarterly earnings fall by almost £400 compared to the previous three months.

However, among freelancers in professional occupations, there was actually an increase in quarterly earnings. Average day rates among associate professional and technical freelancers increased too. Most freelancers (67%) also believe they will recover some of the recent losses in day rates over the coming year, with an average expected increase of eight per cent.

Freelancers are also less pessimistic about the performance of their businesses and the economy in the short term. Although their confidence in their business performance over the next three months fell this quarter, it is still in positive territory. And although their confidence in the wider economy for the next three months is in negative territory, it is still much higher than their confidence for the next 12 months.

IPSE is calling for the scrapping of the extension of changes to IR35 to the private sector.

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