iR35 and Recruitment Agencies win and Consultants lose out!

Consultancy talent is losing out vs Agencies still racking it in for contracts that are inside iR35. I bet someone hasn’t said that to you yet.

For those contractors that are finding work through agencies and more likely to be finding assignments that are inside iR35… whilst you are losing out big time.

But fear not! Agencies are still making the big bucks for all of your hard work and actually their percentage of the money you receive (net) is far greater than it has ever been.

Here is an example for you.

Your pay (inside iR35)

Daily rate - £600

Agency Fee (10%) - £60

Monthly Total

Your money after tax - £5823

Agency fee - £1320

The above is worked out using a 22-day month. This equates to the agency earning 22.7% of your earnings every day you work for them.

Recruitment agencies are very useful for finding the work and have seen a downturn since this iR35 nonsense started a few years ago, then Brexit/Elections and Covid ‘perfect storm’, which has affected the market considerably and is putting out of business SME’s every day.

Companies are now putting every role in, no matter if it is inside or outside of iR35 to cover their own backs. This is understandable as the rules penalise companies if a consultancy goes bust.

All in all we can see is that interims who work long hours and deliver huge value and have no job security or financial security at all are penalised whilst companies still try to bleed them dry and agencies sit there collecting money. Great model if you are not a consultant.

So what do you do about it. Here are a few options:

• The government cancels this ludicrous scheme which has really been brought in because of a few unscrupulous CEO’s of public sector organisations getting away with tax fraud for years. We are hopeful that they will reconsider otherwise the big 4 consultancy firms will just benefit whilst SME’s will suffer. I hope our PM Boris Johnson will support SME’s in this perfect storm of Covid and support SME’s.
• Just accept what you are given and go back to a 40hr working week instead of slogging your heart out for your weekly invoice and try to balance your budget on a massively reduced salary.
• Try to get a salary commensurate of what you are currently earning.. good luck
• Join consultancies like People Squad who are working on assignments that are typically outside iR35 as they are change orientated and based on statement of works etc.

If you are interested in learning about such opportunities register with us and keep in touch.

Regards

People Squad Team