I recently read the London Business Survey from the Confederation of British Industry and KPMG, which showed London’s growth over the next five years is expected to be driven by technology and creative industries.
In my opinion, this will put IT contractors in high demand and create a highly competitive environment for both hirers and contractors alike.
With IT contractors being under pressure to rise to the challenge and recent legislation changes effecting agencies, I thought it’d be useful to highlight the main concerns in the market.
False self-employment legislation
At a recent IT sector meeting, organised by APSCo and attended by industry specialists such as Total Jobs, I gave a presentation explaining that false self-employment legislation is one of the biggest challenges facing the market.
Under changes first announced in the 2013 Autumn Statement, workers on agency payroll, using a compliant UK based umbrella provider, or are the director of their own personal service company where tax and national insurance is deducted from their salary, have nothing to worry about. However, sole traders using recruitment agencies to source work may need to reconsider their working options.
Additional reporting requirements were also introduced for agencies, including the worker’s full name, National Insurance number, address, date of birth, gender, passport number or ID card number, reasons why income tax and National Insurance Contributions have not been deducted by an employment intermediary, the name and address of the business that is supplying the worker to the employment business, and the number of hours the payment related to.
Understanding how to comply has been a challenge for many agencies and the complicated legislation has caused uncertainty.
Upskilling
I believe that the focus is well and truly on skills in the IT sector, with hirers wanting to access contractors who already have the skills they need.
The 16th Harvey Nash CIO (Chief Information Officers) Survey suggests that IT contractors need to upskill and those that hope to succeed will need to have the digital skills and experience that will help to fill the skills gap and help businesses improve revenue growth.
The skills that are now most in demand include change management, project management, software development and IT strategy. Contractors will need to demonstrate their proficiency in some or all of these areas in order to secure contracts.
Pay rates
Daily rates for contractors are largely on the rise, bucking the trend amongst permanent employees for stagnating wages. However, IT contractors aren’t witnessing pay growth everywhere and cuts in the financial sector have threatened the stability of temporary workers.
Several big banks have not cut pay rates for IT contractors, including Barclays. The bank confirmed to ContractorUK that it had downgraded the pay of contractors in both its US and UK divisions by ten per cent.
I am a chartered tax advisor with a specialism in the freelance contractor sector advising contractors on how to structure their affairs and recruitment businesses and end hirers on the effective…
