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Demystifying IR35: How It Affects Planning, Development and Regeneration Projects
16 Dec, 20241-2 minutes
In this blog, you will learn:
- What IR35 is.
- The difference between inside and outside IR35.
- How IR35 affects planning, development and regeneration projects.
- Where the latest planning, development and regeneration jobs are and how to apply for them.
- Discover more about our planning, development and regeneration recruitment services.
IR35 can be confusing, especially when it comes to the effects it has on contractors and the planning projects they work on.
The main role of IR35 is to determine whether a worker is legitimately self-employed or if they should be classed as an employee for tax purposes.
In our recent blog, we’re uncovering everything you need to know about IR35 and how it can affect planning, development and regeneration projects throughout the UK.
What is IR35?
IR35 is a tax law within the UK aiming to clarify the employment status and tax obligations of those who provide services through intermediaries, such as a partnership or limited company.
IR35 was introduced in 2000 and was designed to combat tax avoidance being committed by individuals who would typically be considered an employee, if it not be for their intermediary.
Those who sit within the scope of IR35 must pay similar taxes as a regular employee, which includes accounting for income tax and national insurance contributions against their earnings.
It is the responsibility of a workers intermediary, or sometimes the body responsible for hiring a person, to determine whether their employment status falls under IR35.
What is the difference between inside and outside IR35?
The key differences between inside IR35 and outside IR35, include:
Inside IR35
- A contractor's working arrangements are similar to that of an employee.
- A contractor is subject to PAYE (Pay As You Earn) taxation.
- There are fewer tax advantages and not as much tax flexibility for contractors.
- There is a higher amount of administration for the client or hirer in terms of reporting and tax calculations.
Outside IR35
- A contractor’s working arrangement is assessed as self-employed.
- A contractor is not subject to PAYE taxation.
- A contractor is able to structure their income tax-efficiently, which is usually operated via a limited company.
- There is less administrative burden for the client or hirer in terms of tax deductions.
How does IR35 affect planning, development and regeneration projects?
IR35 can affect planning, development and regeneration projects across the UK in a number of ways, including:
- Increased costs for employers.
- Delays on projects.
- Regional and local impacts.
- Changes in project models.
- Sustainability challenges.
Increased costs for employers
One significant impact that IR35 can have on planning, development and regeneration projects across the UK is the increased cost for employers. The administrative costs that accompany IR35 and determining the status of contractors can result in compliance costs. Mistakes within IR35 determinations can also be costly if penalties are encountered.
Delays on projects
Should contractors prefer to work outside IR35, where they can often experience better flexibility and financial advantages, this can result in a reluctance to work inside IR35 and therefore create gaps within the workforce. A lacking workforce may lead to project delays which can be timely and costly to private organisations or local authorities.
Local authorities and private organisations often hire contractors for their expertise in urban planning and with fewer contractors willing to work inside IR35, this might slow down the entire planning process.
Regional and local impacts
Regeneration projects that operate on a large scale often rely on a flexible workforce in order to meet their demands across different regions. The option to work inside or outside IR35 might disproportionately impact projects across regions that have a lower availability of permanent staff, such as locations in rural areas or less economically developed regions.
Changes in project models
In order to avoid any implications associated with IR35, some local authorities or private organisations may prefer to hire permanent staff rather than those who work on a contract basis. This therefore may affect the flexibility of some roles within planning and development projects.
Sustainability challenges
Should planning, development and regeneration workforces face IR35-driven disruptions, this might delay sustainability initiatives that must be implemented by specialists within the sector. If projects are unable to meet their environmental targets, or unable to meet regulatory compliance, this could have a negative impact on the overall success of a project and be costly for developers and local authorities.
Planning jobs
If you’re searching for your next interim planning job, why not take a look at the latest vacancies, or simply upload your CV to be notified when a relevant position becomes available.
Planning recruitment services
As planning recruitment specialists, we support local authorities and private sector businesses nationwide with their temporary, interim and permanent recruitment needs.
If you’re struggling to fill a vacancy, why not get in touch with our planning specialist, Joel Khambay on 01772 954200 to see how we can help?
Who is Spencer Clarke Group?
Established in 2017, we’re a vibrant and progressive recruitment agency based in the heart of the North West.
We continually reimagine the recruitment process to challenge convention and defy expectations; from creating a better recruitment experience to remodelling employee engagement, we thrive off doing things differently and turning heads along the way.
We operate in two sectors:
In eleven specialisms:
Healthcare, Social Care & Nursing
Corporate Functions & Business Support
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