New research into the long-term implications of IR35 shows that more than half of managers in the construction industry are concerned about how the legislation will affect its workforce.

The research, from multi-disciple recruitment experts, Search Consultancy, highlights that 56% of managers believe the changes to tax legislation will leave them with a significant skills shortage as end clients veer on the side of caution when recruiting contractors.

Coming into play on 6th April 2021, responsibility will now fall on the end client to determine whether contractors are self-employed or employed for tax purposes. Confusion surrounding the legislation means end clients are taking a conservative approach to hiring contractors, significantly reducing the talent pool available to them.

With 83% of managers within construction believing the industry already suffers from a skills shortage, IR35 could worsen an already difficult situation.

Paul Kynaston, managing director of construction & property at Search, said: “It is impossible to determine the impact changes to IR35 legislation will have on the industry just yet. However, the concern we have with companies going down the route of a low risk blanket ban on personal services companies means there could be restricted access to particular unique skill sets. Workers could also be panic pigeonholed into PAYE when they might legitimately continue to operate through a PSC.

“IR35 needs to be managed with balance against other risks, such as losing top talent in the industry, or finding that a company’s approach to IR35 sends PSC contractors in the direction of the competition.”

To support businesses and workers unsure about whether IR35 affects them, Search Consultancy has curated advise from tax experts and is sharing this in  its “Ask the Expert” hub. 

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