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Contractors think government would prefer them to become permanent employees

While almost half (46%) of contractors think they are valued, 18% feel businesses discourage contracting

Six out of 10 (60%) contractors think the government would prefer them to become permanent employees, according to research from advisory Contracting Scout.

The Contractor Confidence survey found that while almost half (46%) of contractors think that they are valued as an important part of the workforce, 18% still feel the business sector discourages contracting.

Will Ryles, head of recruitment at Contracting Scout, said it is little wonder that contractors feel the government is trying to push them out of contracting. “April 2016 saw new legislation come into force restricting travel and subsistence tax-relief for some umbrella or limited company workers inside IR35, as well as changes to the way dividends are taxed,” he explained.

“The Autumn Statement is expected to reveal further details of the proposed changes to IR35 in the public sector. Contractors have enough to deal with without constant tax changes. There seems little appreciation for the fact that contractors provide flexibility and specialist skills that businesses and the public sector would not otherwise be able to access.”

IR35 is the UK tax legislation designed to tax so-called 'disguised employment' at a rate similar to employment. Currently it is the contractor's responsibility to ensure they do not fall under IR35, but from April 2017 public sector clients will be responsible for considering whether IR35 applies. Where it does apply the client will be responsible for deducting tax and NICs.

Contractors were found to be most likely to think the UK leaving the EU will have a negative impact on their ability to find work rather than a positive one (26% compared with 11%). However, more than a quarter (26%) do not know what the impact will be. More than four in 10 (44%) plan to increase the rates they charge over the next 12 months.