A question that all contractors ask themselves at one point in their career is: do I work inside or outside IR35?
Most, but not all, opt for the latter and prefer to work outside IR35. But before you make your decision, we want you to know the benefits and what you could gain from working inside.
Believe it or not, contractors that have secured a contract within IR35 will have additional benefits and protection. As a LTD company there are additional benefits to being inside and using an umbrella company. You will get holiday, sickness, maternity benefits etc from the umbrella company.
Lower Personal Liability – One thing that you may not know is you are still able to work as a LTD company when you have a contract inside IR35. This means that your personal liability is extremely low, particularly as the director of the company. If something were to go wrong, and we hope it doesn’t, any personal assets that are possessed by the contractor cannot be touched.
Future Projects – The benefits of being able to work as a LTD company on both inside and outside projects give you as the contractor a lot more flexibility when considering future contracts.
More Control – You have more control over the projects you participate in, and you are still able to work on several contracts at one time. A contractor has complete control over their rates and terms working both inside and outside of IR35. In other words, you could conclude the terms of the agreement if things do not work out as planned.
Making Financial Decisions – As the contractor in charge of the LTD company, you can manage your finances the way you want. You have complete responsibility for how funds are taken out of the company and what expenditures are incurred.
Since IR35 is becoming a significant part of many contracting agreements, numerous employers and contractors are querying the changes and trends caused by IR35 and how they will be affected. The government has made many adjustments to the IR35 agreement, and with other elements coming into play, certain trends are arising.
So, what are the trends we’re seeing?
IR35 trends in technology – With the technology sector advancing every year and more contractors required for more jobs, it is anticipated that IR35 will play an even more prominent part in the industry than ever before. Recent adjustments have been made and are being made to guarantee that the rules and regulations are standardised. This is especially crucial for contractors operating in sectors that are growing most, such as artificial intelligence and cyber security.
IR35 trends in artificial intelligence – AI has developed and improved its procedures at a rapid pace. With it being employed in practically every industry nowadays, this is a sector that is advancing every day. In fact, one of the leading trends in the AI sector is that contractors are now being employed on a project-by-project basis, instead of for a particular length of time. This may alter the way you presently do dealings with employers in upcoming years.
IR35 trends in cyber security – Companies do not want to miss out on top contractors, especially those with whom they already have a relationship. Many worry that their projects would simply not be performed to the same high standard thanks to the cyber security talent that occurs with contractors working under IR35. As a result, thanks to the new IR35 reforms, there is expected to be a 40% pay increase to compensate for the increased tax impact generated.
We hope that this information gives you more of an insight into working inside IR35. If you have any other queries, please feel free to contact our consultants at Focus On ServiceNow and they will be happy to help in any way possible.