ICT agreement favours contractors

IT professionals who come to work in the UK from countries outside Europe on intra company transfers will need to be paid at least £41,500 following a change in the rules regarding these arrangements.

The Tier 2 ICT Rules have been tightened up, and the Home Office has announced that only graduate roles will be exempt from the newly imposed salary threshold once it takes effect in April 2017.

The Association of Independent Professionals and the Self Employed has applauded the move, which was recommended by the Migration Advisory Committee earlier this year. They believe that the government has done the right thing by adopting their recommendations and reducing the opportunities for ICT permits to be abused by businesses attempting to reduce their wage bills by bringing in cheap labour from overseas.

This had the knock-on effect of displacing UK contractors who would be unable to compete with the low wages on offer by large IT firms who were outsourcing their technical roles. This has been addressed by IPSE who have reminded the government that it will be vital to ensure that there are no loopholes in the new legislation which will allow businesses to pay below the salary threshold.

IPSE’s Andy Chamberlain has described the current system as ‘not fit for purpose’ because of it’s failure to ensure a level playing field for independent professionals in the UK running their own IT micro businesses.

Between now and when the legislation takes full effect, there will be a transitional period which companies can use to adjust to the new regime, particularly those who are most likely to be affected such as large technology firms in India.

The Home Office has also taken on board the MACs recommendation to perform a skills review of the UK’s IT sector, although they are only considering how best to go about it at the moment.

Anyone considering a career as a contractor will want to know how much they could be earning, and our contractor take-home pay calculator is designed to simplify those calculations. For more information about your finances, our guide to contractor tax contains plenty of useful information as does our page dedicated to the life of an IT Contractor.

If you want expert advice on all aspects of your finances, then our accountants are always on hand to offer the benefit of their expertise. Whether you are just starting out, or considering your next move as a contractor, our team can help so call today on 01442 275789 or email newbusiness@sjdaccountancy.com for more information.

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