[ujjain]

Contract work has been under attack by IR35, fortunately this has been postponed by a year.

These are uncertain times. A lot of contractors have moved back to permie and competition is high.

You can try to obtain a 6 or 12 month contract if you have a decent stack of emergency cash (e.g. £25k) lying around.

I wouldn't overanalyze it. Try to see your options out there.

If you can get 3 contract offers in 1 month, then obviously you're still fine. If you can get 1 contract offer after trying for 3 months, I'd consider not taking it.

Analyze and feel the market, so you can form your opinion instead of just going based on stories that other people produce. Some people can't find a low-paying job in the best of times. Some people will have plenty of opportunities in the worst of times.

[bluehatbrit]

This seems pretty sensible advice to me. I've seen it go both ways for contracts at the moment, some are really struggling and others are doing really well.

As ever, with contracting you're always taking on some risk when you come to the end of a contract. Much of your ability to get a contract will depend on your network (as well as skills and experience).

A lot of it depends on whether OP is looking to do full time contracting and leave their current job or just fill the 20% of their time they have now. But either way, the best idea is to go and look for the work and see what's around.

[cs02rm0]

+1

The picture seems to be mixed, not just in the contract market. That might mean those out of contract are swarming around what's available, but you only need to land one contract to get started.

Personally, I don't know anyone who's not moved to a new contract for the same client over the financial year boundary, but that's obviously just anecdotal and most of the contractors I know are in the same sector.

[arichard123]

IR35 may be less of a thing now anyway. It's purpose (for those not in the know) is to stop people being taxed as companies while working as, effectively, employees. There are no hard and fast tests for this, exactly, but a number of smaller tests which taken together would paint a picture. One of these tests is "Where do you work" another is "Whose equipment do you use" and another is "Can you substitute someone in place of you". If the answer to these are "Home" "Mine" and "Yes if I could find someone but that's not the plan" then I don't think IR35 applies to you. Clearly that's going to cover a lot of contract work at the moment.

Now, I don't know about Freelancing in terms of big businesses and what view their legal departments take, but UK small business doesn't give 2 hoots about IR35.

I read with some amusement a couple of years ago in Private Eye that their freedom of information request to know how many people had been investigated and prosecuted for failure to declare IR35 status had been refused on the grounds that "the answer would undermine the rule of law" (more or less - my memory isn't perfect).

[BerislavLopac]

The problem with the recent -- currently postponed -- changes is not with the IR35 itself; it has been a thing for quite some time now. The changes are about redefining who is responsible for determining the IR35 status: in the old (still valid) regulation, the responsibility is in the hands of the contractor's company, while with the new changes it falls down to the end client.

The reason this change is not welcome by the contractors is that many end clients -- primarily large banks and similar corporations -- do not want to bother checking each individual contract; instead they tend to make blanket decisions and declare all external contracts as inside IR35. And being inside IR35 is the worst of both worlds: you get taxed as if you're a full employee, but you're still not entitled to full employee's benefits like paid sick days or holidays.

[bambataa]

I must admit I’ve never really understood this argument against IR35. Contractors don’t get tax breaks to compensate for the lack of employee benefits. They get higher day rates to compensate for that. How the tax is handled isn’t part of the deal. If my last contract had been inside IR35 it would have still been better than perm pay for that reason.

Too many contractors seem to view lower taxes as one of the perks of being a contractor and in that sense I think the reforms are well-intended though I wont’t say the implementation has been perfect.

[chuck3201]

> How the tax is handled isn’t part of the deal.

It kind of is though? There is a reason why company directors are able to withdraw money as salary or as dividends - their income is less stable, they take more risk, so they are allowed to take more profit in good times but they feel the pain more in bad times too.

Also, as limited company contractors, we haven't received any meaningful support from the government over Corona. Most contractors pay themselves a minimum salary of around £719 / month. The only government support available to such people now is to furlough themselves which gives you £575 / month, which is only a tad above universal credit.

I'm not complaining about that though, its fair enough because we are NOT employees, but thats also why HMRC should stop treating us like employees too.

[bambataa]

The day rate being higher accounts for the uncertainty. There is also nothing preventing a director paying themselves a monthly salary (e.g £2k) to flatten out the highs and lows. I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that. Maybe it’s more widespread than I thought.

If you deliberately structure your income to minimise tax you can’t really complain that it also minimises the support available.

Edit since you said you’re not complaining. I understand in-IR35 contracts aren’t eligible for furlough? That’s definitely an example of poor implementation imo.

[chuck3201]

> The day rate being higher accounts for the uncertainty.

Thats partially true, but if you look at outside IR-35 contracts, they might go for £400 / day. While the same kind of work but inside IR35 goes for £600 / day. So HMRC are effectively pushing the burden of a flexible work force entirely on the shoulders of contractors and the clients they work for. This is a huge disruption to both businesses and contractors alike, its also questionable if it will even raise enough revenue for HMRC to make the disruption worth it.

> I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that.

You're right, directors of big businesses are paying themselves salaries in the 6 figures and taking out even larger dividends. But for myself, I am usually only in work about 6-9 months a year, I've never worked a contract for more than 6 months, when I'm not in work I spend that time learning and up-skilling to invest back into my career and business. I cannot realistically put myself on a salary of £2k / month when its perfectly feasable that I might be out of work for 6 months or more at any one time. The bottom line is that my working conditions and the benefits I receive (or lack thereof) are much closer that of somebody running a "real" business than it is to a permanent employee, so I should not be taxed as an employee.

> I understand in-IR35 contracts aren’t eligible for furlough?

Honestly I have no idea! I've only ever work outside IR35. I would have thought that inside IR-35 would be comparable to gig-economy workers and sole-traders so they should get 80% of their average earnings over the last three years. But again I am not certain of that.

EDIT: If you're talking about people who work the same contract job for 2+ years and are effectively employed by their client despite working through a limited company, then yes I would agree they are cheating the system. But instead of going after those people, HMRC are making the majority of contractors like myself who are genuinely self-employed, pay for the sins of a minority of contractors who are actually in disguised employment.

[BerislavLopac]

I'm not exactly sure what you mean by "this argument against IR35". My comment was trying to explain what the changes are about, not whether IR35 should exist of not.

[tomlagier]

Just my anecdata - I've been trying to start freelancing after an aborted roud-the-world trip. I've moonlighted in the past and have a decent, if generic resume (FAANG, popular tech stacks). I've been looking for about a month now and have had two good proposals fall through, with three others being considered. The two that fell through were squarely due to COVID - businesses being ruled non-essential mid negotiation.

So far it feels tough, but doable. If I go another month without a good project, I may consider going back to W2.