Recruitment agencies and IR35

13th Feb '17 by serg

2 comments 1356 reads

Hi all,

I hold shares in Empresaria (LON:EMR) but after reading about IR35 I'm actually considering disposing them before April. It does look to me that the new rules coming into force will increase costs for agencies and there is a good change many people working through PSC would decide to move onto permanent work which my understanding is that it isn't as profitable to the agencies as contract work.

Has anyone been looking into this? How do you see it affecting recruitment agencies?

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About the Author

Serg

Premium Member

2 comments

JamesrWilson1989

13th Feb '17

Hi Serg - as a recruitment consultant myself I can assure you that permanent recruitment is far more profitable than contractors.

I can't help with the IR35 stuff as I recruit for permanent employees only.

Hope that helps.

skyjacker

13th Feb '17

I don't anticipate that new IR35 in Public sector will have big impact on agencies. Essentially HMRC is interested if contract is inside or outside IR35, if contract is inside then take home pay for contractor is much lower as contractors PSC would have to pay out all income less allowable costs as employment income which would be subject to employers and employees NI and Income tax. If contractor is outside IR35 typically
bulk of the income as dividend from his company's profits which are subject to corporation tax. It is less beneficial to be inside IR35 as take home pay is significantly lower.

For agencies if contract is inside or outside IR35 do not make as much difference as they can place contractors through what is called umbrella company and still get their fee. Of course there might be less candidates willing to undertake work in Governmental sector. Alternative is that governmental sector will hire more permanent or fixed term contract employees which could have positive impact on profits in short term but longer term make income a bit bumpier.

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Recruitment agencies and IR35

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About the Author

Serg

2 comments

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