In November’s UK Winter Budget, the government outlined plans that could reverse the trend that freelancers have seen since 2020. The new decade was welcomed in with changes to IR35 legislation that took away the allure of the freelance.
Many companies dropped freelancers faster than a hot potato covered in Gochujang chilli sauce. Those freelancers with a portfolio of clients that escaped devastation got away lightly with slower onboarding processes and increased admin as companies complied with the changes made.
What were the IR35 changes and what did they mean?
These changes switched the responsibility for determining whether a contract or contractor falls inside or outside of IR35. Previously, this had been the responsibility of the freelancer themselves, but this left plenty of scope for confusion. With such a buoyant freelance industry, compliance was a nightmare to police and the government had been missing out on millions.
By shifting the responsibility for compliance to employers, the government hoped to stop freelancers benefitting from super-long-term contracts that promised the same rights as employees, but without the tax liability.
In the wake of this change many companies decided to play it safe, sloughing freelancers faster than ever. Those organisations that continued using freelancers introduced a series of questions or a link to the government’s IR35 determination tool ‘CEST’ as part of their onboarding process.
Why is the winter budget making freelancers more attractive?
Changes outlined in the winter budget expected to be implemented in April this year are putting the appeal back into the freelance market. The reason for this: employees are to become more expensive to employ. When viewed beside this new reality where an organisation’s tax bill is potentially substantially higher, a little extra admin during onboarding doesn’t feel so intimidating.
What changes did the Chancellor announce in the Winter budget?
From April 2025, organisations will pay 15% instead of 13.8% National Insurance Contribution for every eligible employee on their payroll.
At the same time, the Chancellor announced a reduction in the Employer National Insurance Contribution threshold. This means that the threshold for where an employer must pay National Insurance tax drops. This means many employers are now paying NI contributions on staff they didn’t previously have to pay for. A sneaky move by the government, landing a punch with those companies flying just south of the radar when it comes to determining hours or pay levels.
How could higher NI contributions be good news for freelancers?
There’s nothing like a rise in costs to make a business rethink strategy. The economy is already seeing the effects, with many businesses casting off unnecessary staff as they decrease payrolled staff, and organisations pausing recruitment processes.
However, companies still need experienced and knowledgeable writers to create good quality content (despite all the hype around AI). In fact, it’s more important than ever to be posting knowledgeable and insightful content to really establish your reputation amid a sea of information. And, while today companies are culling staff, at some point, holes will begin to emerge. Skills or experience gaps or simply insufficient staff for the tasks that need doing. It’s in this moment that skilled and experienced freelancers and copywriters who can hit the ground running, and who don’t come with long notice periods or a hefty tax bill increase, will look even more tempting than before.