Self-employed workforce is unprepared for upcoming changes to off-payroll working rules

According to new research from EY TaxChat, the majority of the UK’s self-employed workforce is unprepared for the upcoming changes to off-payroll working rules, known as IR35, which come into law in April this year.

The research, based on a poll of over 500 self-employed workers, found that only 3% of self-employed individuals believe the changes to the IR35 tax regime should go ahead in April, while 44% think the Government should delay the changes. 72% of impacted contractors have not yet made any preparations ahead of the deadline.

From Tuesday 6th April 2021, businesses will determine the IR35 status of contractors working through a company. The restructuring is designed to tackle non-compliance with the off-payroll working rules, making all public sector and medium and large organisations in the private and third sectors responsible for determining the tax status of contractors and ensuring that the right employment taxes are paid.

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.”

Research shows 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.

Mr Lee concluded: “With the pandemic already significantly affecting many self-employed individuals, this topic may be one that has been missed or pushed to the periphery. With large numbers believing it is likely to have a negative impact on their income, it is understandable that stress and anxiety are running high. Although there is so much else going on, we would encourage anyone uncertain of the changes to seek advice and to ensure they are ready come the 6th of April.”