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Freelancers’ confidence in their own business outlook and the economy is at its lowest level on record, according to IPSE, the Association of Independent Professionals and the Self Employed.

The study, conducted in association with Upwork, recorded its first ever negative index score in relation to freelancers’ business confidence outlook for the next 12 months.

IPSE found more than a quarter (28%) of freelancers were confident in their business performance improving in the next 12 months. This is significantly lower than the second quarter of 2015 when 41% were confident. The top two factors cited as negatively affecting confidence levels are related to changes in public policy, namely government attitudes towards freelancing and regulation. IPSE is concerned proposed changes to travel and subsistence tax relief, increased taxation on dividends and potential tightening of ‘IR35’ tax rules have led to this drop in confidence.

IPSE found that inflationary pressures on freelancers are modest, with more than half (56%) of those surveyed experiencing no inflation or deflation of business costs over the past 12 months. However, almost two thirds (65%) of freelancers expect these costs to increase over the next 12 months.

The report also suggested that fewer freelancers are taking time off between contracts. A fall in the number of weeks without freelance work was recorded, dropping from 2.6 weeks in Q2 of this year to 2.2 weeks in Q3 2015.

Chris Bryce, IPSE CEO, said: “It is clear that freelancer confidence levels have taken a knock. IPSE is deeply concerned over current proposals for changes to travel and subsistence tax relief and more forceful implementation of IR35 – which still operates under an outdated format. These changes have the potential to affect a significant driver of the UK economy and put tens of thousands of freelancers out of business. We call on the Government to rethink these proposals to restore freelancers’ lost confidence.”

Rich Pearson, SVP of Marketing and Categories at Upwork, said: “Increasing business costs are a key concern for freelancers in the UK. Fortunately, technology is reducing friction in the job search process and making it easier for these professionals to find projects quickly and ultimately earn more money.”