The legislation, which was due to come into effect on 6 April 2020, relate to the use of temporary contractors, which would see every medium and large private sector business in the UK become responsible for determining the tax status of any contract worker. The new rules were designed to address perceived ‘tax abuses’ associated with off-payroll working.
The announcement of a yearlong delay is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.
Chris Hickey, UK CEO at Robert Walters, comments:
“Whilst it is too early to predict how this will change hiring patterns for the next year, we have already noticed an increase in companies (and contractors alike) getting in touch with us following the announcement.
“Greater accessibility to contractors will no doubt help plug any short-term skills gaps we may likely experience in the coming months, as well as ease pressure on industries experiencing a particularly high level of demand – such as e-commerce, telecommunications, healthcare & pharma, and supply chain.”
A positive ‘gig economy’
Contractors represent approximately 2million of the UK working population and according to Robert Walters insight, the ‘gig economy’ has been performing particularly well in the past few years.
According to the Robert Walters Contractor Pay Guide, contract roles increased by 21% in the last year, in particular within secretarial & business support (+32%), procurement & supply chain (+31%), legal (+25%), HR (+29%), accounting & finance (+22%), IT & tech (+11%), and marketing (+7%).
Particular growth regions for contract roles include Birmingham (72%), Milton Keynes (31%), Manchester (+29%), and London (19%).
Changes to new off-payroll rules
According to a recent Robert Walters survey of 1,500 contractors, three quarters of respondents (71%) stated that they had considered becoming a permanent employee as a response to the pending changes to tax rules.
Whilst only 5% of contractors admitted to having a plan in place with their client post-IR35, 20% did state that they had undertaken research and were in current conversation with their client at the time of the survey (January 2020).
Chris Hickey, adds: “It is important to note that we were less than a week away from IR35 implementation, and so hirers [or businesses] had already put in a vast amount of time and investment to prepare for this change.
“In some cases, we were seeing firms convert contractors to permanent employees, or choose to issue blanket bans on certain contractors who operate under personal service companies (PSCs).
“One thing is for certain, contractors play an important role in our economy and business operations. Now more than ever, contractors’ ability to ‘hit the ground running’ on projects, experience of remote on-boarding, and working away from the office or teams, will prove helpful for firms.”
Demand for contractors
According to the Robert Walters Contractor Pay Guide, contractor pay rates are expected to increase by approximately 10-15% across most sectors, with specialist in-demand skill sets being able to demand anything up to 25-30% increase.
Robert Walters predict an increase in short-term projects for contractors around risk & compliance, change management, and tech infrastructure.
For more information request a copy of the Robert Walters Contractor Pay Guide.