back to article It's the UK contractor tax factor: IR35 outsiders gaining leverage in skills market, survey finds

Contractors able to continue working outside the IR35 regulations are gaining leverage in the market and succeeding in punting their scarce skills, according to a survey. Responses from 491 self-employed freelancers, contractors and consultants in March and April showed 55 per cent of contractors outside IR35 say a shortage of …

  1. Pascal Monett Silver badge

    Seems that the market functions like the Internet

    It routes around obstructions.

    1. Anonymous Coward
      Anonymous Coward

      Re: Seems that the market functions like the Internet

      Sometimes! What I have noticed is salary offers of permie jobs have jumped 20-30k to 90-100, which is nice, but shows that IR35 is costing businesses to get talent (as opposed to using contractors and the virtually non-existent risk of getting caught in HMRCs web).

      I do know of some places that blanketed contractors and then offered poor salaries. Unsurprisingly they aren't filling their vacancies...

      1. 0laf
        Childcatcher

        Re: Seems that the market functions like the Internet

        It sounds like a bit of a Mexican standoff right now.

        Businesses don't want to take on IR35 burdens but neither do they want to pay the required salary rate for specialisms they previously contracted for.

        Contractors are unwilling to take poor salaries as full time employees.

        So as businesses wait for contractors to starve and give in, they don't get their required work done. Who will blink first?

        I've read both sides of the argument and it seems that although there may have been a requirement to reform tax arrangments for contractors, IR35 seems to have been a cackhanded way to do it which in the end suits no one, not even the treasury.

        1. Doctor Syntax Silver badge

          Re: Seems that the market functions like the Internet

          "So as businesses wait for contractors to starve and give in"

          The moral of the story - at least according to the article - is htat it's going to be a long wait.

        2. Dave 15 Silver badge

          Re: Seems that the market functions like the Internet

          Work is available in Europe so no one need starve. On the other hand jobs have been bled to eastern Europe nd Bangalore for decades. HMG made a bad blunder with ir35 but hasn't the courage o admit it. Frankly IT in the Uk is near dead anyway the only jobs left are javascript on websites paying lower rates than Tesco

      2. Kubla Cant Silver badge

        Re: Seems that the market functions like the Internet

        My impression over the past few months is that rates are increasing for contracts inside IR35. But I doubt that they've increased enough to cover the additional costs for most contractors.

      3. DevOpsTimothyC Bronze badge

        Re: Seems that the market functions like the Internet

        What I have noticed is salary offers of permie jobs have jumped 20-30k to 90-100, which is nice, but shows that IR35 is costing businesses to get talent

        The business was probably already paying the contractor that £20-30k, most of which was going to HMRC as corporate tax. Now it will be going to HMRC labelled as National Insurance contributions.

        The biggest change here is that instead of having a person that a business can terminate with no notice the business has to deal with an employee who has holiday pay, probably pension contributions and cannot be dismissed with zero notice.

  2. Fred Daggy Bronze badge

    Taxes also. Although, I prefer the water analogy for taxes.

    Taxes always seek to the lowest point. Helped by a few pumps to get over a few hills of course.

    1. Efer Brick
      Devil

      Gravity sucks, so does IR35 ;-)

  3. Dave 15 Silver badge

    Ir35 the death of our computer industry

    With ir35 working inside it provides all the costs and none of the benefit of freelancing so only a mug, a stupid blithering idiot of a mug would take on the job. This means either companies are happy to scratch and find people so hopeless they can't get a real job or they will have to take a contractor from a foreign source. This means skills are lost, opportunities for growth missed and the demise of the whole industry. Ir 35 is a Thatcher scale fuck up

    1. Anonymous Coward
      Anonymous Coward

      Re: Ir35 the death of our computer industry

      And the geniuses who stuck to their guns with this didn't factor in that COVID's change to working attitudes of most businesses, aka remote working, now means that head hunters are considering candidates who are not in the same country as the job.

      Those working in IT are typically the easiest to work remotely. I know I'm getting recruiters pushing roles outside the UK. I've got to assume that I am not unique on that front.

  4. Anonymous Coward
    Anonymous Coward

    Oh here we go

    A robust IR35 discussion.

    In before Jake, that bloated gasbag of exaggerated tales of experience, plonks himself here and rattles off a ton of American perception of IR35.

    1. markr555

      Re: Oh here we go

      I see your pathetic little vendetta against Jake continues, although as per usual you post as AC. Here's a thought; either grow a pair and use your handle, or STFU, you petty little prick!

    2. Paul Hovnanian Silver badge

      Re: Oh here we go

      I don't know Jake or any of his stories. But to be fair, on this side of the pond, we have had far longer experience with our IRS and its contractor vs employee rules.

      There's the letter of the law. And then the actual practice of the auditor threatening to examine every aspect of both your and your customer's finances should you attempt to avail yourself of the deductions. Meanwhile, the attorney down the road is a partner in his firm and writes off the cost of his yacht and private jet because he entertained a client there once.

      One way or the other, the tax situation is rife with abuse. I want either less corruption or more opportunity to participate in it.

  5. sam 12

    Two tales of IR35 working......

    1) Feb 2020 - Went inside IR35 with a bank client, told like it or lump it - attitude of client was pretty crap to be fair, many disgruntled contractors but given circumstances of start of last year it wasn't a great time to jump ship. Many disgruntled contractors, not just at IR35 but client and agency's attitude too. Agency had brass-neck to tell us that being inside IR35, even with less money at end of the day was a blessing in disguise and we'd actually be better off and happier - yet despite many folks asking them how, they never ever answered

    2) Feb 2021 - Went inside with new client after working with them as an outside IR35 contractor from August 2020 - This time things were very different, we all got a 33% raise on our day rate to cover employers NI, holiday pay and a pension contribution - I work directly for agency now with no need to touch an umbrella company

    To be honest I'd still rather be outside IR35 but the current role is good with another years worth of work at least, so happy to stay for now

  6. Velv
    Headmaster

    "paid employees without the employment benefits"

    No, its pay in lieu of benefits. How you spend the money (holiday, health cover, pension, critical illness, gym membership, etc) is entirely up to the employee, and you are an employee whether that's as a direct employee of the end client, an agency employee, or an employee of a Limited Company who pimp your services to the client and pay you minimum wage.

    I don't agree with the way HMRC has written and implemented IR35 to capture the different structures of employment, but lets be accurate about what those structures of employment are.

    1. Paul Hovnanian Silver badge

      "or an employee of a Limited Company who pimp your services to the client"

      How often does HMRC find a bunch of people working as 'employees' in a firm, but effectively partners? Where they distribute the firm's revenue based on who brought it in. And 'the boss' is actually a filing cabinet in the Cayman Islands law office?

  7. NogginTheNog

    Skills shortage

    More simply, there's a lot less incentive for inside-IR35 contractors to spend money on acquiring and maintaining skills when that's no longer tax-deductible?

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