IR35 – Over six months in – the impact of the new IR35 rules on freelancers and clients
We’ve previously covered the IR35 legislation introduced in April 2021, and how it would directly change the way businesses and freelancers work together. Now we take a snapshot of what things look like over six months in for both businesses and freelancers.
The practical impact for businesses
Despite the widespread rumours that working via a PSC would be killed off by IR35, that has not been the case – indeed our anecdotal market feedback is that businesses may be becoming more comfortable again with engaging PSC freelancers after the initial shock effect. This would be the case where proper assessments, terms and payment flows are in place, like on YunoJuno.
But all businesses have their own risk decisions and engagement preferences. For example, an IPSE survey found that 21% of clients would be insisting all freelancers work inside IR35 – and a similar level expressed a preference for using only umbrella company freelancers. The flexibility of YunoJuno is that both these preferred ways of engaging can be accommodated.
The personal and financial impact for freelancers
It is certainly true that the new IR35 rules have been a rollercoaster ride for a lot of PSC freelancers – both to understand what the new rules are and to understand how it may affect their personal earnings via their PSC. Every freelancer is a human being, so for them, this is not a topic without an emotional element too.
There has for sure been a huge element of soul searching about what, for each person, is the ‘right’ way to do work for their clients – for some this has been to carry on running their PSC, for others it has been to move to work via an umbrella company. This shift has, however, not been as dramatic as feared in early 2021.
We can report that the PSC is alive and well and in the market there are volumes of both Inside IR35 and Outside IR35 work being undertaken.
We have seen freelancers day rates go up, whilst clients budgets are being squeezed when working with a freelancer Inside of IR35. This process is part of the market settling.
Transparency & risk
The most important learning from the initial period of the new IR35 rules has been that transparency is key – it is the key element that lets the market settle to where it needs to be:
- Transparency about the impact of IR35 on freelancer rates – so that freelancers and clients can agree rates which are economically viable for both.
- Transparency about responsibilities between freelancers and clients and anyone in the middle.
- Transparency about payments and dealings with HMRC.
- Transparency about any applicable insurance.
All of these things help ensure rules are followed and risk is minimised – and are dealt with by the YunoJuno platform - book your demo today.
What’s your experience?
Here at YunoJuno, we’re always looking to hear from our freelancers and clients on the impact these changes have had on their individual circumstances, so we want to hear from you. What has been the biggest day to day impact on you?