Public sector IR35 exodus: 85% of PSCs to quit

The half of limited company contractors who plan to quit the public sector over contentious changes to IR35 on April 6th has ballooned to well over three-quarters, new findings suggest.

A survey of almost 2,000 contractors shows that 85 per cent will abandon their contract at a taxpayer-funded body by moving to the private sector within the next seven weeks.

The finding is at odds with claims that “rather than leave the public sector,” most PSCs will “look to increase” their pay to “cover the losses” in earnings that the changes will impose.

However status advisory Qdos, which ran the survey, explained that the exodus of approximately 1,700 contractors was dependent on their ‘outside IR35’ status not remaining.

The first big clue such contractors can get about whether their status will change will be on Monday, when a tool end-users will use to help them decide their PSCs’ status is scheduled to launch.

Although the tool will not be mandatory, comprehensive or capable of correcting wrong inputs, the status decision it churns out will be “tricky” to challenge, Qdos’s CEO has said.

Speaking about his firm’s survey findings, Seb Maley reflected: “The contracting workforce intend to maintain their independence…[but] the public sector may not see the benefits.

“Understandably, contractors are feeling threatened… [so] many [are] planning to stop working on public sector contracts should they be found caught by the new IR35 rules.”

Editor’s Note: Related –

Contractors’ Questions: What if I’m contracting at a local council from April?

Contractors’ Questions: Will clients up rates to cover IR35 getting tougher?

Contractors’ Questions: Is a weak right of substitution fatal with IR35?