The Benefits of Being Your Own Boss
21 November 2020How much do contractors earn and how has the pandemic affected rates?
5 May 2021We’ve teamed up with our partners at IPSE to deliver a webinar on this year’s Caroola Contractor Survey. Each year we take stock of the thoughts and perceptions of the contracting community, which feels more pertinent than ever before. The global pandemic, and a lack of support from the central government, has led to a very tumultuous year for independent workers.
Taking centre stage on the webinar was our very own James Foster and Joanne Harris. They discussed at length the opinions of our 2,300 strong contributors who took part in the Contractor Survey. There were a number of talking points throughout the webinar, including Coronavirus, IR35, contractor motivations and the resilience within the contracting community.
Contractors and coronavirus
The elephant in the zoom (call). Obviously, this has had a huge societal impact and contractors are no different. This is exemplified by the data in the Contractor Survey. 64.5% of respondents have had at least one contract postponed, with only 3% seeing an upturn in work in 2020.
Another big theme was the lack of government support. Also known as “Forgotten LTD”, nearly two-thirds of our contributors reported that they have not applied for financial help from the government. This is not due to contractors needing less financial help, but more due to the fact government support hasn’t been designed for independent professionals.
For example, only 20% of the contractors surveyed made use of the Coronavirus Job Retention Scheme (CJRS). This is despite limited company directors being eligible for the scheme. The reluctance for limited company directors to access this is likely down to only being able to claim on PAYE salary and not dividends.
Despite the precarious position contractors have found themselves in, 72% of independent workers remain committed to contracting for at least the next 3 years. Citing flexibility, pay and lifestyle on reasons they wouldn’t change.
IR35
Following on from the public sector off-payroll reforms in 2017, comes the private sector payroll reforms in April 2021. This was initially due to come into effect in April 2020 but was postponed by the government due to COVID-19. At the beginning of the year, we expected IR35 reform to dominate this year’s Contractor Survey. But, as with everything else, this was overshadowed by the pandemic.
The survey revealed that three-quarters of contractors expect businesses to lose out due to IR35 reform. This highlights the importance of businesses preparing for these changes, so they can continue to benefit from engaging with these workers, but there is little confidence among contractors that is the case. As a result, 43% of contractors are considering working through an umbrella company as a way to continue contracting after the reforms.
Contractor motivations
What are the main drivers in pursuing a career in independent working? We found a number of different factors in the Contractor Survey. For example, 82% of respondents said that they were attracted to contracting because of a higher earning potential. In addition to higher pay, contractors noted a better work-life balance, financial security and flexible working as notable reasons for becoming a contractor. Furthermore, 90% felt that contracting met their expectations.
Contractors remain resilient
We know freelancers have been some of the hardest hit by the pandemic. Many have been left with little to no support by the government. Although there have been a number of pressure groups that have been mentioned in Parliament such as IPSE, Forgotten UK and Excluded UK, there has been no real change to support for many contractors.
That being said, through times of crisis contractors do remain resilient. For example, 15% of contractors who incorporated their business before the last recession (2008), are still going strong and are partnering with Caroola to support them with their accounting needs. Meaning that even in an economic downturn, they were able to carry on trading for 12 or more years.
If you want to find out more, or would like a copy of the Caroola Contractor Survey, request a callback and a member of the team will be in touch.
