IR35 to drive out 1 in 3 contractors

The Professional Contractors Group (PCG) has warned that as many as one third of UK IT contractors could end up working abroad unless IR35 tax changes are altered.

The industry body claims contractors are already setting up shop in Ireland, the Netherlands, New Zealand and the US, rather than continuing in the UK with tax changes looming in March. The PCG has also begun talks with the American embassy to offer its members advice on how to obtain three-year work visas.

David Ramsden, director of the PCG, said: "It is only a trickle of people actually leaving at the moment, but we think this will quickly become a flood. It could be as high as 30 per cent."

Ramsden said the impact for UK business could be higher rates for contractors as they seek cover the increased costs caused by the legislation.

"The UK government recognises there is a skills shortage and has lessened visa restrictions for non-EU citizens with special skills who want to work in the UK. But at the same time its tax changes are driving people with the same skills away," he said.