Hindsight is a wonderful thing! Steve Jobs once said, 'you can't connect the dots looking forwards, you can only connect them looking back'. After a year of working with IR35 implemented in the private sector, what have we learnt?
April 2021 was a crazy time to be a contractor; with the double hit of both Coronavirus lockdowns and IR35 implementation, it seemed like the market was never going to recover. There were plenty of long-term contractors I know personally who were considering making the switch to perm and far too many companies trying to figure out their IR35 policy and process right up to the last minute (remember the GDPR implementation and you're along the right lines).
Now, a lot has changed and although it took a while... contract is back! Companies have their IR35 assessment process in place and going through this project has been an internal learning and development project for many HR managers, directors and CTO's throughout Cambridge and London. Now that more of them understand contract, they seem to want to use this knowledge and the newly created process, meaning more contract roles.
The obvious impact of Coronavirus and IR35 implementation is that many contractors decided to take permanent positions. More roles and less contractors means it has become a supply in demand culture, therefore has been a natural uplift in the pay of contractors with the best developers that are justifying 30% more than they would have 12 months ago.
As well as this natural uplift in contractor rates, we now have the consideration of Inside IR35 positions. Contractors are rightly hesitant to take these roles without a large uplift in pay due to the tax implications and the fact that they have to keep the lights o with their Limited companies for the next 6/12/18 months. There are a lot of contractors out there still to this day that will not work Inside IR35 positions regardless of the daily rate.
The assessment tools have become far more sophisticated! Gone are the days where CEST was the only option and many companies that create the status determination with also insure the decision in case it ever gets queried by HMRC and with HRC failing to back their own tool in court; it pays to cover your own backs on these.
If you are a client that would like to implement an IR35 process, learn more about the true cost of hiring a contractor or you would like to find out if you are exempt from IR35 altogether - contact us.