IR35 holds back economy

IR35 rules fuel crisis in self-employment

It has been suggested that HMRC's battles with BBC stars over the controversial IR35 rules have contributed to a crisis in self-employment. A survey by the Association of Independent Professionals and the Self-Employed (IPSE) found that one in ten highly skilled freelancers is currently out of work due to the IR35 reforms. More than half of the respondents said they had turned down work because it was deemed "inside IR35" by a company. The decline in self-employed workers has been significant, with the number dropping from 5m in 2019 to 4.2m in 2022. Analysis suggests that IR35 reforms have cost freelancers £1.5bn in taxes, double the original estimate. Andy Chamberlain of the IPSE said: “Having noted HMRC's dogged determination to win high profile IR35 battles with TV stars – brushing off successive court defeats in the process – hirers are concluding that working with freelancers risks inviting too much hassle from the taxman."