Contractors

This is IR35: the abridged version. For full deets, see the government website.

You’re likely aware that the age of the contractor is coming to a close. The public sector has been required to treat contractors as employees since 2017, except in unusual circumstances. The same is coming to the private sector next year. In our industry, this is big news as tech companies have lived, thrived and sailed away on the back of IT contractors.

At the moment, many contractors have their own limited companies and pay themselves a salary and dividend through that vehicle, which is tax efficient for them. HMRC has ruled that this is not a practice to be encouraged and, if in all other respects the contractor is an employee, then they need to be taxed as an employee via PAYE. This is known as ‘being inside IR35’. Consequently, contractors in IR35 need to be on the payroll of an ‘umbrella company’.

Hackney Council can now only employ contractors inside IR35.

One of the bonuses of being inside IR35 is that contractors are entitled to Hackney’s annual leave of 27 days plus bank holidays every year. And Hackney has waived the legal 12 weeks before these entitlements kick in so contractors are eligible as soon as they start the post. The umbrella will bump up your pay packet each month to allow for days off; or, you will continue to be paid your daily rate while relaxing pool-side.