A study from self-employment support body IPSE shows freelancers’ confidence is at its lowest level since the organisation began surveying.
The Freelancer Confidence Index, conducted by IPSE in association with Upwork, recorded its first ever negative index score in relation to freelancers’ business confidence outlook for the next 12 months.
IPSE finds more than a quarter (28 per cent) of freelancers are confident in their business performance improving in the next 12 months, significantly lower than the second quarter of 2015 when 41 per cent were confident.
The top two factors cited as negatively affecting confidence levels are related to changes in public policy, namely government attitudes towards freelancing and regulation.
IPSE is concerned proposed changes to travel and subsistence tax relief, increased taxation on dividends and potential tightening of ‘IR35’ tax rules have led to this drop in confidence.
IPSE finds that inflationary pressures on freelancers are modest, with more than half (56 per cent) of those surveyed experiencing no inflation or deflation of business costs over the past 12 months. However, almost two thirds (65 per cent) of freelancers expect these costs to increase over the next 12 months.
The report also suggests that fewer freelancers are taking time off between contracts. A fall in the number of weeks without freelance work was recorded, dropping from 2.6 weeks in Q2 of this year to 2.2 weeks in Q3 2015.
Chris Bryce, IPSE CEO says, ‘It is clear that freelancer confidence levels have taken a knock. IPSE is deeply concerned over current proposals for changes to travel and subsistence tax relief and more forceful implementation of IR35 – which still operates under an outdated format.
‘These changes have the potential to affect a significant driver of the UK economy and put tens of thousands of freelancers out of business. We call on the government to rethink these proposals to restore freelancers’ lost confidence.’
Professor Andrew Burke, Dean of Trinity Business School, Trinity College Dublin and co-author of the report adds, ‘Despite the drop in confidence among freelancers, the sector continues to do very well with high capacity utilisation among freelancers.
‘What is impressive is that against an increasingly tough external business environment, freelancers have been able to achieve business performance through their own efforts in brand building, innovation and collaborating with other freelancers on contracts.’