72% of contractors remain committed to working for themselves despite COVID-19

New research from leading contracting accountancy firm, SJD Accountancy, has found that the vast majority of UK contractors and freelancers remain resilient and hopeful for the future, despite industry fears caused by COVID-19.

The survey, which took into account the views of more than 2,300 contractors in financial services, IT, and engineering, confirmed that 72 per cent of contractors plan to continue working independently for the next three years at least.

Included in this group were 27 per cent of contractors who see themselves contracting for the next 11 years at least, with 20 per cent feeling ‘very positive’ or ‘positive’ about their future prospects and 38 per cent feeling ‘neutral’.

Concerns linked to the COVID-19 pandemic were evident, with 66 per cent of contractors admitting to being worried about the impact of the virus on their work.

However, 43 per cent of respondents say the pandemic has not affected their work and 62 per cent would still recommend contracting to a friend. One respondent went on to explain their confidence in the market, saying: “Covid-19 and IR35 will have an impact on the market in the short term, but ultimately end-clients still need their projects delivered. Their businesses will not stop working, it’s just that the landscape will be different.”

Most contractors (65.9 per cent) have not applied for financial aid from the government since the introduction of various support measures and only 20 per cent of contractors have used the Coronavirus Job Retention Scheme (CJRS).

The second, third and fourth most common support options used were mortgage holidays (8.9%), VAT deferrals (8.5%) and the Business Bounce Back Loan (6.2%), all of which are delays on payment or loans that must be repaid, rather than support grants.

James Foster, Senior Commercial Manager at SJD Accountancy, said: “Our annual contractor survey has given us some valuable insights into the minds of contractors, and we’re pleased to see the general consensus is that people are still committed and passionate about their careers in contracting, despite the current difficult climate.

“Contractors have been among the hardest hit by the Coronavirus pandemic because bigger companies are receiving significant help from the government, with PAYE employees supported by the CJRS. With this, limited company contractors have been somewhat left behind in terms of financial aid.

“As employees of their companies, most contractors are eligible for the CJRS. However, only a salary can make up part of these CJRS claims and, unfortunately, most contractors draw the majority of their income as dividends and take only a small salary. Therefore, contractors were forced to weigh up if placing themselves on furlough and stopping work altogether was financially worthwhile. It would appear that, in many cases, contractors felt it was not.

“Nonetheless, and despite the uncertainty caused by the crisis, contractors are showing their resilience, with most determined to carry on working for themselves. This should be a welcomed attitude for all because the flexibility and talent within the contractor workforce will have a crucial role to play in the UK’s economic recovery in the months and years ahead.”

SJD Accountancy’s annual survey has been running for nine years and gains valuable insights from the firm’s varied database of contractors and freelancers on leading industry topics, including IR35, pensions and mortgages.