New data from the Association of Professional Staffing Companies (APSCo) reveals that professional contracting vacancies grew year-on-year by 6 per cent.

The average, however, conceals larger growth in contracting roles in some professional sectors. Temporary vacancies leapt by 10 per cent year-on-year in finance and accounting and by 7 per cent in IT. While permanent vacancies in engineering plunged by 12 per cent, temporary roles for Umbrella Company Employees and other contracting professionals rose by 1 per cent.

The number of self-employed professionals had soared by over half a million in the UK since 2010, representing more than a quarter of the growth in total employment. APSCo CEO Ann Swain commented: “There are now in excess of 4.6 million professionals working on a self-employed basis, representing 15 per cent of the UK workforce.

“This month saw the Department for Business, Innovation and Skills (BIS) publish a review of self-employment, which called for changes to the taxation system, alongside more flexible financial solutions in areas such mortgages and pensions, and equal treatment for benefits like Maternity Allowance.

“Likewise, the recruitment profession is also responding to this structural change in the jobs market, as organisations and contractors alike reap the economic benefits of working on a flexible basis.”

Ironically, Ms Swain’s observations about the spectacular growth in contracting roles arise at a time when the Government is poised to make flexible working via Umbrella Companies less viable. HMRC, in defiance of industry-wide recommendations, has unilaterally altered the definition of workers who are subject to the ‘supervision, direction or control’ (SDC) of an end client.

Until now, the term has applied only to permanent employees and relatively unskilled contingent workers but a definitional sleight of hand has expanded it to mean not merely actual SDC but the right to SDC. The effect is to include the majority of contracting professionals in the SDC net, despite the fact that they are considered by recruiters, end clients and themselves as independent.

The rule change is scheduled to take effect from 6th April and will abolish tax relief on the huge travel and subsistence (T&S) expenses contractors routinely incur. These flexible professionals are willing to travel far greater distances than permanent employees, delivering much-needed skills to complete vital projects.

Umbrella Company trade body PRISM estimates that these workers will lose a third of their income overnight should the rule change take effect. The costs to clients are likely to rise steeply as a result, as contracting professionals increase their pay rates to compensate for the loss of tax relief – a development that will either hit budgets in private and public sector organisations heavily or exacerbate the UK’s pressing skills shortages.

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