Contracting Ends next April | Chancellor Intends Abolition

IT Contracting Ends in April
IT Contracting Ends in April

Contracting Ends in the UK

According to feverish speculation in the national and contractor press, IT Contracting ends, as we know it, from next April.

The Chancellor, George Osborne, he with the £4.5m offshore family trust, has always seen British contractors as tax avoiders.

He had already signalled, in his Budget, that he intended to take away the right of umbrella company contractors and personal service company contractors to be able to offset travel and subsistence allowances against tax.

This takes away any tax advantage for contractors to pay monthy fees to umbrella companies just for paying them..

Now, it seems, he is going to go further.

Contractors on Company Payrolls

According to national newspapers (who must have been briefed by Treasury Officials), the Chancellor is going to force contractors, who stay more than a motnh at a company, i.e. all of them, to go on the payroll of the company.

So, it seems that the the Chancellor no longer wants contractors to be able to use intermediaries to pay them. The include umbrella companies and personal service companies.

Contractors would have to go on the payroll of either the client company after a month, or on the payroll of the agency.

Contract Rates Will Plunge

This is a nightmare scenario. That’s not only for the UK’s almost 5m contractors, but for the client companies and/or the agency as well.

The payrolls of the client companies aren’t set up to deal with contractors who would receive no benefits like sick pay, maternity pay or pensions.

Client companies would be far less likely to use contractors if they had to take them onto the payroll. That would mean fewer contracts which would send contract rates plummeting.

Contractors Working for Agencies

As client companies wouldn’t want to have contractors on their payrolls, who does that leave?

Yes, it looks like IT contractors would have to become employees of their agencies.

With contractors normally getting their contracts through different agencies that would cause mayhem – with contractors jumping agency every few months.

It seems that the Chancellor is doing this because he had been losing national insurance contributions from contractors and clients alike.

Contracting Ends Soon

However, in trying to fix this, it looks like he will be bringing an end to IT Contracting as we know it in the UK.

IT Contracting ends next April if the national newspapers are right.

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    • I don’t know what you expected to happen in April 2016 but a hell of a lot happened in April 2017. The Government changd dthe IR35 rules in the public sector so that the departments decided the IR3 5status of contractors instead of teh contractors. HMRC also produced a new online IR35 test. Tens of thousands of contractors in the public sector who used to operate through limited companies now use umrella companies with a huge drop in their income. There were major consequences for the public sector depts like the NHS. Now that is likely to happen in the private sector too. I don’t know what you mean when you say nothing happened. Public sector contractor would not agree with you.

      • They say, Chris, that there’s none so blind as those that won’t see. Tat’s the only thing I can think of to explain why Ian thinks nothing happened.


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