IR35 changes are impacted self-employed confidence - the Government has been ...

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Self-employed earnings and confidence in the economy saw a "remarkable recovery" in the first quarter of 2021 according to new research by IPSE and PeoplePerHour. In Q1 2021, freelancers' average quarterly earnings stood at £20,778, a 20 percent increase from £17,283 at the end of 2020.

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This rise, according to IPSE, was due to an increase in both their day rates and the amount of work they did at the start of this year.

Freelancers’ average spare capacity (the number of weeks they go each quarter without work) dropped from 4.3 weeks to 3.7 weeks.

Although this is still not quite back to pre-pandemic levels (3.3 weeks in Q1 2020), on average, freelancers compensated by raising their day rates (£445 on average – the highest since Q3 2019).

Freelancers’ confidence in the UK economy also dramatically rose both for the short- and long-term. Short-term (three month) confidence increased from -27.8 to -4.3, which is the highest it has reached since Q4 2015, before the EU referendum.

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IR35IR35 changes have impacted the self-employed (Image: GETTY)

Long-term (12-month) economic confidence rose from -27.7 to -0.2, also the highest since Q4 2015.

Despite these positive results, it should be noted the "key metric, that did not significantly recover was freelancers' confidence in the performance of their own businesses.

Freelancers’ three-month confidence in their businesses dropped from -11.9 to -13.9, while their 12-month confidence remained stable at -15.6.

IPSE highlighted this is the first time since 2014 that freelancers have had less confidence in their business than the economy.

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This seems to be driven by the changes to IR35 taxation and their impact on hiring freelancers with "Government regulation related to hiring freelancers" and "Government tax policy" cited as the two main factors negatively affecting their

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