IT Contracting, A Full Time Occupation

IT is a very popular and common field among UK contractors. The nature of the profession is one that often requires specialist attention for relatively short periods of time, which is perfect for the line of work that contractors are in.

Recent research has shown however that the number of IT professionals making the move to contracting is increasing, and many are making the transfer a permanent career choice as opposed to a short term move.

What is a Contractor?

Contractors are professional individuals working through their own limited companies that are hired by larger firms on relatively short term contract bases. A contractor is basically a professional who is self-employed via a limited company they may have set up. Contractors are hired by larger companies for fairly short periods of time and although will work for the company for the duration of their contract, are not actually an employee.

IT Contractors

IT is a line of work that commonly requires specialist and high quality expertise and is something that not always needs full time attention. IT contractors are usually hired for periods of 6 months to a year, and sometimes even shorter than that. From recent results in surveys amongst contractors however, it is becoming clear that contractors in IT are fully committing their time to contracting, as opposed to using contracts as a stepping stone between jobs. This rise in IT contractors is not an unnatural trend within the contracting world, with the amount of self-employed professionals working through limited companies increasing more and more. With an influx of contractors however, the increase in HMRC pressure on contractor’s tax status is inevitable.


What is IR35? : IR35 is a tax legislation brought about by the HMRC to tackle contractors across the nation. As self-employed as opposed to being employees, contractors pay much less tax than the average worker, and it is because of this (along with high earnings) that contracting is such a popular line of work. IR35 is basically a system created by the tax office to discern whether or not those professionals who are working as contractors (and paying less tax) are actually working to the guidelines of being a contractor and not posing as one to avoid paying money to the HMRC. These contractors who are actually treated as employees but pose as limited company contractors to avoid the taxman are known as ‘disguised employees’, and it is this notion that the whole IR35 legislation is based upon.

With an increase in IT contractors, the HMRC are stepping up their game when it comes to IR35 inquests and inquiries. It is because of this that the contractors who are taking up contracting as a full time occupation remain aware of the risks that they are taking and the importance of keeping on top of their IR35 status.

By:Steven Bailey

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