More than half (57 per cent) of self-employed people don’t know what IR35 is according to research from FreeAgent. At the same time 30 per cent would like to see IR35 legislation for the private sector dropped and only 12.9 per cent want to retain the legislation.
The legislation, which has been heavily criticised by tax experts and the business community as being poorly conceived, badly implemented by HMRC and causing unnecessary costs and hardships for genuine small businesses, has not been well communicated to self-employed people. Tax experts have predicted that IR35 could reduce a worker’s net income by up to 25 per cent and Chancellor of the Exchequer, Sajid Javid, recently announced the Conservative Party’s plan to review IR35.
Confirming that tax laws for small businesses are complex, when asked what they’d like to see on the new government’s agenda, 44.5 per cent of respondents stated they would like to see the UK tax code simplified for small businesses and over half (56 per cent) of self-employed workers in the UK want the new government to cut taxes for small business.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “It is almost unbelievable that IR35, which has a massive impact on self-employed people, is unbeknown to many of them. Despite this, I can’t help but feel the shock is dulled by the expectation provoked by notoriously poor government communication.
“The revelation that less than half of self-employed people even know what IR35 is reveals a deeper problem – a vacuum of conveyance of important information between the government and small businesses,” he added. “The need for a more informed UK small business nation extends beyond IR35 and applies to other regulations which, at the end of the day, can make or break small businesses.”
Molyneux suggests that when the government reviews the IR35 legislation in the coming weeks, it keeps small businesses and self employed people at the heart of the decision: “This is a delicate state and nonchalant decisions made without clear communication to those most affected is simply not acceptable,” he said.