Rates for IT contract staff are likely to increase, contractor groups warned this week, as the Inland Revenue released guidelines on its controversial IR35 tax reforms.
Under the scheme, which comes into force in April, contractors working on a client's premises for a month or more will be treated as employees for tax purposes, the guidelines reveal.
The move, which is likely to mean a significant rise in contractor's national insurance bills, will encourage many contractors to seek work overseas, rather than in the UK, contractors claimed. "Some will go overseas, some will decide to go back to permanent employment. There will be quite a shake-up," the Professional Contractors Group said.
Businesses have expressed concern that IR35 could push contractor rates up at a time when skilled staff are in short supply.
Read more on IT for small and medium-sized enterprises (SME)
IR35 private sector reforms: National Grid contractors up in arms over tax status assessments
IR35 private sector reforms: IT contractors weigh up their post-April 2020 work options
IR35 private sector reforms: Research suggests 75% of contractors will leave posts by April 2020
IR35 reforms: Consultation on private sector roll-out confirmed in Autumn Budget 2017