More than two thirds (67%) of freelancers are unaware of impending changes to IR35 legislation, new research has found.
Changes to IR35 legislation, which are set to be rolled out next April, aim to tackle the problem of ‘disguised employment’ where businesses hire freelancers as opposed to hiring them as staff.
Additionally, the research, which was commissioned by YunoJuno, revealed that more than a quarter (26%) of freelancers said that the changes would influence the contracts that they would accept in future, while 25% said that they would reconsider working for a single client to prevent being caught out by new regulations.
Shib Matthews, CEO at YunoJuno, said it is troubling to see so many people uncertain about the impacts brought about by these changes. “The introductions are a ticking time bomb for freelancers who fall foul of the regulations. If IR35 applies, it could reduce a worker’s net income by up to 25%, costing thousands of pounds in additional income tax and NICs,” Matthews shared.
The tax legislation changes could mean that freelancers will be required to pay £9,000 more in tax while clients will see a surge in administrative pressures, paperwork and heightened recruiter costs.
For agencies that regularly hire freelancers, the research revealed that 43% of senior staff were still oblivious as to how IR35 would affect their business and 42% unaware of the financial repercussions of non-compliance.
Despite a third of business owners admitting gaps in their understanding of legal responsibilities, 28% said that they would research impending taxes online, rather than turning to experts.