Here at Danbro we work hard to represent the voice of contractors across the country and share our insights, experiences and advice to help the sector grow and prosper. With that in mind, we’ve gazed into the crystal ball and here share our predictions for what self-employed people, temporary workers, freelancers and contractors can expect from 2016.

Government plans and regulations have delivered mixed results for the self-employed sector, but we can look ahead to the next 12 months with optimism and expect to see growth.

Contractor sector will continue to grow in size

There are currently 1.9 million self-employed people in the UK and that number will continue to grow over the next year. Current predictions show that the sector will grow in numbers for at least another five years.

Using freelance specialists is the modern way of working and thousands of businesses regularly turn to contractors for the expertise they need. Growing confidence in the economy and rising capital investment will fuel an increased demand for independent professionals and the pressure of these market forces will help to grow salaries.

Couple this with major Government investment programmes and a growing skills shortage in a number of industries and the desire for freelance experts is guaranteed to rise, fuelling an influx of more independent professionals into industry.

There is also a growing appetite for global contractors. British experts are in high demand and many overseas firms are turning to UK shores to get the skills and insights they need. While many head to foreign shores, there is rapid growth in contractors providing remote services through online connections.

New tax rules will have minimal impact

New rules on travel and subsistence claims come into force in April but they will do little to deter contractors from taking on new clients. Our own research suggested many were concerned about the impact of the rules, but the reality is that the benefits for self-employed workers will still outweigh these new measures.

Contractors typically earn much more than full-time staff and the ability to pick and choose work while also accelerating your career path will remain more attractive. Many may lose out in the short-term, but market forces should begin to correct losses in the months to come.

Fears over new IR35 regulations have also been allayed, with HMRC now revealing they are shelving plans to introduce a one test suits all approach.

Undoubtedly, the market isn’t as attractive as it was and some contractors will lose out in real terms while demand adjusts but the benefits of being a contractor still remain strong.

Umbrella companies will remain an attractive option

Many fear contractors will move away from typical umbrella companies into Personal Service Companies (PSC’s) in an attempt to reduce the impact of the new travel and subsistence rules. The reality is that quality professional employment firms will remain a very attractive option for many self-employed people, providing a stable yet flexible and uncomplicated way of working.

Some umbrella companies may struggle, but for firms like Danbro, the service they provide will continue to be a popular option.

Using a professional employment firm is a very efficient, cost-effective and low-admin way of working and many offer a range of other services to help make life as a contractor easier. Schemes like Danbro Rewards for those using our professional employment services ensure they can access a wealth of benefits and in-house expertise. This guarantees you are earning in the most efficient way possible while having to do little in the way of managing your business finances.

Future IR35 legislation will be better suited to industry

The news that HMRC has shelved IR35 proposals for at least a year has been welcomed across the sector. Plans to boil down employment indicators into one simple supervision, direction or control test met with howls of protest from those who feared many independent professionals would be unduly affected.

The good news is that HMRC has listened and is going back to the drawing board to look at how best contractors can be accurately assessed. We can expect an open and lengthy consultation this year and that should result in a clear and accurate system for future IR35 legislation.

What will be the key sectors for contractors in 2016?

As we’ve said we can expect to see strong growth in most sectors but the stand out sectors look to be finance and IT, with both seeing significant demand for freelance expertise. Contractors in these sectors are the most confident about their prospects in the months ahead but those in a number of other industries can have high hopes.

Government infrastructure projects like HS2 and major building programmes means engineers and construction contractors will be in high demand and the growing burden on the health sector to deliver high quality services for less means expert contractors will also be needed to deliver the much needed reforms.

Manufacturing continues to grow in confidence and the rise in exports across multiple industries in the UK means more and more expertise will be needed as individual businesses battle to meet new orders.

Put simply, the contractor sector is healthy and can look forward to a buoyant year ahead. If you’re thinking about taking the leap into self-employment or are a contractor wanting to enhance the way you operate, speak to our experts for advice.

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