The State of Off-Payroll report – May 2021

In April we asked contractors about their current IR35 status determinations, attitudes towards clients and contractor feeling. Below we’ve summarised the key takeaways and have compiled the findings into a pdf report.

Report headlines

  • Companies using unfair IR35 assessments risk losing competitive advantage in flexible skills market
  • Two-track market of specialist consultants with bargaining power, and generalist contractors without emerges
  • Contentious use of umbrellas continues to cloud the outlook for contractors reinforcing calls for employment rights

Key takeaways

Current status

36% of contractors are outside IR35 compared to 16% at the same time last year.

  • 35% are inside IR35
  • 29% don’t currently have a client or are waiting on or challenging a determination
  • 71% of those inside IR35 are being paid by an umbrella company

Attitude towards clients

Over half (55%) of the contractors operating outside IR35 said a shortage of skills in their industry had increased their bargaining power with clients, to the extent that 70% of this cohort said their status was determined fairly by clients. In general, there’s a sense that those determined to be inside IR35 have not had a fair deal – over three-quarters (77%) of those inside IR35/PSC ban said the status determination had been conducted unfairly in contrast with two thirds (67%) of those determined outside IR35 who claim they were fairly assessed.

  • 47% of contractors say there is a difference between how the client publicly says they treat employees and suppliers and how they’ve been treated
  • 46% wouldn’t recommend their client to other contractors
  • 82% of those inside IR35 / subject to a PSC ban are looking for a new client

Contractor feeling

When asked ‘how optimistic do you feel about your contracting career compared to the same time last year?’ the contractors outside IR35 said that they are cautiously optimistic compared to the contractors inside IR35/subject to a PSC ban who are pessimistic about their future.

  • 78% of those inside IR35 want full employment rights and benefits
  • 81% would at the very least consider joining a class action to seek employment rights

Read the full report below