Katy Thorne, lead consultant, Penguin Recruitment, demystifies the latest IR35 legislation for the town planning industry.
As of 6 April 2021, end user clients in the private sector have to take full responsibility for the IR35 assessment of contractors engaged through personal service companies.
Many contractors have expressed concerns that this latest update to the off-payroll legislation will have a negative impact on their work prospects. According to the Association of Independent Professionals and the Self-Employed (IPSE), nearly a third of freelancers are planning to stop contracting in the UK due to the latest IR35 legislation.
We caught up with Katy Thorne, lead consultant at Penguin Recruitment, to find out what impact IR35 is having on town planning careers and recruitment.
Katy, for those who don’t know, what exactly is IR35?
IR35 is the off-payroll legislation designed to combat tax avoidance by workers and the firms hiring them. It affects employers who contract work out that would usually be carried out by a permanent employee. Similarly, it affects contractors who supply services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.
What changes to IR35 took effect from 6 April 2021?
The planned rollout for the changes of IR35 in the private sector was delayed from April 2020 due to the COVID-19 crisis. The new rules in place from 6 April 2021 mean that the client rather than the contractor is in charge of changing the status for contractors who come under the IR35 umbrella.
It is now up to the end-client to decide on whether your working relationship falls inside or outside IR35 as a bid for the government to avoid misuse and avoidance of tax by contractors.
How is IR35 affecting the town planning industry?
From working in the town planning sector we have seen lots of candidates who are usually contracting in the market now looking for permanent roles. We think this may be largely due to the new changes of IR35. We have also found that lots of our clients who usually look to hire contractors are now looking to hire permanent members of staff. However, this may be due to the demand of the market at the moment as it’s never looked so buoyant.
As the economy opens up, how will IR35 impact on town planning recruitment?
Even with the economy opening up and more people returning to offices, flexible working has been given a massive boost by COVID-19 in the town planning industry, which means permanent employees can achieve a work/life balance on par with contractors. Some employers we work with have even suggested 100% home working will be on the table.
As a result of the rise in flexible working, combined with the new IR35 rules, I think we may see a continuing trend whereby more contractors will be looking for permanent positions. If contractors are forced into PAYE anyway, in many cases they will be lured by permanent positions where they can access perks such as security of employment, sick pay, maternity/paternity pay, holiday pay, pension and other employment rights that they may otherwise miss out on.
What if a company has not prepared for IR35?
Non-compliance with IR35 can result in hefty fines so private sector employers in town planning urgently need to understand and implement the government’s guidance if they haven’t already done so.
What advice would you give a town planning contractor?
If you are a town planning contractor where IR35 would be applicable to you then I would suggest reaching out to your current employer to ensure they are aware of the new legislation and that the changes have been implemented.
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