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Recruiters lobby over IR35 skills shortages



Bill Goodwin

Changes made by the Government to the way self- employed IT workers are taxed could lead to a shortage of contractors with...

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Bill Goodwin

Changes made by the Government to the way self- employed IT workers are taxed could lead to a shortage of contractors with up-to-date skills, recruitment companies claimed this week.

Job agencies are lobbying the Government to give tax relief to contractors that spend money on training courses to keep their skill sets current.

They fear that, unless the Government takes action, employers will face increasing difficulties finding contractors with the latest e-commerce and operating system skills.

The call follows the Inland Revenue's introduction of the IR35 tax rules earlier this year, which limit the total tax relief that can be claimed by contractors operating as limited companies to 5% of earnings.

Ann Swain, director of the Association of Technology Staffing Companies, which represents IT recruitment agencies, said the limit is "very restrictive".

"If you are looking at training in SAP, it takes six weeks and costs £6,000, and you will have to make sure you get a significant increase in salary to cover that," Swain said.

She claimed that contractors were getting a worse deal than employees of companies that can offset their entire training costs against tax.

  • Association of Technology Staffing Companies is also lobbying against proposed legislation that would make it easier for companies to offer permanent jobs to contractors hired from agencies. The association said the Department of Trade & Industry is trying to address problems that did not exist.

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