There are some changes afoot in the contractor market.
Those of you who have heard the term IR35 will know it’s legislation dating back to the early 2000’s designed to prevent people on generally long term contracts from being ‘employed’ through their own companies and saving significant amounts of National Insurance and sometimes tax.
The decision on whether to apply IR35 and pay the extra tax currently lies with the contractor.
Similar rules were implemented in April 2017 for contractors working for public sector organisations. Instead of contractors themselves being responsible for determining their IR35 status, this obligation has been handed to the engager of each contractor, i.e. the client. Where a contractor is deemed to be ‘inside’ IR35, the fee-payer must deduct employees’ NICs and income tax from the contractor’s pay, as well as paying employers’ NICs.
If you’re a contractor or considering taking this route as a career part, its well worth considering if the new changes will apply to you and if the contract being proposed is still viable.