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IPSE Report Changes in Contractor Confidence

So, the question of the changes in contractor confidence is one that has been under consideration for some time.

For a while now, contractor confidence has been rather negative. In fact, this is the first positive metric that has been seen since the second quarter of 2021. This is over a year with a negative viewpoint of contractors.

However, this metric is specifically contractors rating their own optimism around their prospects for the coming three months. This is quite a narrow window of foresight. Yet this being positive for the first time in quite a while is still something to consider in its own right. It is of course a good thing overall.

There have been a wide range of financial issues in recent times, which will come as no shock. Shortly after the IPSE study was sent out to contractors, inflation hit a 40-year high. This kind of issue should have sent shockwaves through the contractor community and perhaps affected opinion.

Still, it is just one of many issues contractors have been experiencing lately but perhaps there are other things to be positive about.

As we reported recently, less than 6 months ago contractors confidence were taking a much more negative view of their situation. When looking at their perceived prospects for the next 12 months, they are less positive. There are more that feel negatively about the situation than feel positive overall.

Even so, this is still an improvement in comparison to responses taken at the end of 2021.

Cost of Living Impact on Contractors and Freelancers

Looking at a recent Qdos poll, this is not the only thing that freelancers and contractors have concerns about. The cost-of-living crisis has had an effect on contractors. No wonder that over 60% are worried about the cost of living and higher costs generally.

Under 5% selected that they were not concerned at all, so this is affecting most people. And we should perhaps consider this with a bit of a pinch of salt as there were only 240 respondents. It is not surprising though that contractors mirror the rest of the population in feeling the pinch.

For contractors, and freelancers, their income is rarely guaranteed for long. The job that pays well today may be gone tomorrow.

We can still take some positives from the way contractors report to be feeling. There is obviously a glimmer of hope to be seen within the financial darkness. Having short-term belief in yourself and the work you are offering is a good place to be.

This kind of positivity keeps the contractor market going. Despite the issues around IR35 and the unpleasant stories coming out of HMRC’s wranglings with individuals and organisations, contractor confidence opinion is on the up.

Let us hope that the next IPSE survey paints an even more confident and decisive picture. After all, contractors and freelancers are unique in the economy.

Perhaps sector-specific support for these groups could be considered. Although given the path HMRC is following at the moment, perhaps that is a little too ambitious.

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Five Things Contractors Should Consider Before Choosing an Umbrella Company

Increasingly, contractors are seeking work through umbrella companies.

The main reason is that recruiters are increasingly choosing them to take on their contractors for them. Umbrella companies provide some reassurances to businesses, especially with IR35. They also do some of the legwork and save businesses time.

This is a reasonably new phenomenon though and there are plenty of unscrupulous umbrella companies taking advantage of contractors. If you are working with an umbrella company for the first time, here are five things to consider:

1. Will they be your employer?

Although there are plenty of umbrella companies operating in seemingly different ways, this should be a constant. You should be an employee of the umbrella company.

They are your intermediary to manage the process of pay and benefits as well as inevitable contributions. The whole point is that they take these aspects away from you and you can rely on them.

2. Are they PAYE?

Umbrella companies should be using the PAYE system. This takes care of tax and National Insurance as well as other deductions like student loan as money is earned. It avoids large and unexpected bills later.

When you are self-employed, this is an issue you have to deal with when your liability for the year is due. It comes in one lump sum (or two). Yet under an umbrella company, this should all get arranged for you. If they are not PAYE then they are not likely operating correctly.

3. What do their contracts include?

There have been many reports in the media of contractors being asked to sign contracts with dodgy clauses. A bona fide umbrella company should have a template contract to show you. This should be easy to understand without strange and obscure clauses.

If it does have these then you may want to get professional advice to help you to interpret its meaning. If they cannot show you a basic or template contract, be wary.

4. Where are they registered?

So, there have been issues around registration for some businesses. This issue with umbrella companies is that many have been found to be set-up in tax havens. Their contractors are then not paying the correct levels of UK tax and other deductions.

Workers are breaking the law when this happens. Be aware of this, as the answer you really want to hear is they are registered in the UK. Then things should be set-up fairly and correctly for you.

5. A question of accreditation

Finally, you want to ask about their accreditation. Contractors may be taken in by accreditation badges on websites and headed paper.

However, a business that HMRC blacklisted a couple of months ago has been found to be using a badge to suggest authenticity. Yet this badge for “The Institute of Freelancing and Contracting Professionals” may be bogus. It is always worth researching the badges used.

When you work through an umbrella company, do ensure they are working in your best interest. After all, you earn them their money. They need to be of a good reputation and work to gain your trust. Do not just accept what they want you to see on face value.