2020 was a challenging year for workers across the UK as the COVID-19 pandemic caused booms and busts across different industries. The self-employed, including the 1.77 million contractors, were no exception.
Although some contractors have continued working as usual throughout, others have had to adapt and change industries or have had contracts cancelled altogether.
Now in a third national lockdown, whatever your situation, there are things every contractor can do to best prepare themselves for contracting in 2021. In this guide, Umbrella Broker outline 3 ways to prepare yourself for a successful year of contracting.
Be flexible
Prior to the pandemic, it was common for contractors to work in niche areas with specific expertise. However, as COVID has altered the landscape, contractors should now focus on showcasing flexibility.
For example, if you are an IT contractor who specialises merely in coding, it is a good idea to broaden your skills meaning you can open yourself up to more roles within the industry.
As well as showcasing flexibility within your own sector, you may also consider switching industries altogether. After all, the pandemic has caused some industries to suffer badly, while others have flourished. Contractors that work in industries that have suffered may therefore consider widening their skillsets to lend themselves for roles that are in strong demand. After all, many contractor skills are highly transferable.
Industries that have thrived during the pandemic include:
- The healthcare sector: demand is strong for doctors, nurses, medical locums, pharmacists, social care workers, scientists and lab technicians
- Transport and logistics: as shopping has moved largely online, transportation and logistics roles are facing an all-time high. This is great for a range of contractors, whether you have experience in project management, data analysis or can prove you are a great problem-solver
- Food retail: demand is high for front line staff, various warehouse roles and IT roles
- Ecommerce: as we have mentioned, as more of us shop online there is a greater demand for those with skills in everything from web design, marketing to project management
Make the most of downtime
Many contractors will have been placed on the Job Retention Scheme if they were unable to work during the pandemic. This could have been the case if you work through an umbrella company and are therefore an employee of the company, or run a limited company under which you are also an employee.
As the furlough scheme continues until the end of April 2021, contractors should use their time out of work to plan for the future.
As those receiving furlough pay are not permitted to work, this presents a great opportunity for furloughed contractors to spend their time training and gaining new skills which could give them a competitive advantage when they get back to bidding for contracts.
Whether you are considering moving into a new industry or gaining new skills within your existing sector, every contractor that is unable to work due to the furlough scheme should make the most of their downtime and use it to upskill.
There are tons of online resources that make it quick and easy to learn new skills, including:
- Udemy: udemy offer a wide range of courses that will allow you to upskill whatever your sector, from Business, Finance, Marketing to IT and software.
- The Open University: at the Open University contractors can enrol on a range of courses to gain an accredited degree. This allows you to work flexibly via distance learning.
- Skillshare: catered towards contractors in creative industries, Skillshare allows you to take online classes and improve your skillset in your chosen areas.
Be prepared for the year ahead
From April 6th, 2021 changes to IR35 legislation are set to come into effect. IR35 is designed to stop self-employed workers such as contractors from operating as ‘disguised employees’ and ultimately taxes them at the same rate as employees.
If you are a private-sector contractor you may be badly impacted by these reforms as contractors deemed inside IR35 will be subject to PAYE income tax and National Insurance when they may not need to be. These contractors will pay tax as if they were an employee, however they will not benefit from statutory benefits such as holiday pay or sick leave as an employee would.
Currently, it is the responsibility of the contractor to determine their own IR35 status, however from April, it will become the responsibility of the client. The client must issue a Status Determination Statement which will become a legal document from 6th April.
To ensure you aren’t caught out by IR35, contractors should act as quickly as possible and start the new year as they mean to go on.
You will need to talk to the client to discuss IR35 and your status as they have the ultimate say over whether you are ‘in’ or ‘out’. For more help, it’s a great idea to talk to an accountant or IR35 specialist.
One way to ensure that you are exempt from IR35 legislation is to work through an umbrella company. As the umbrella company makes the contractor its employee, IR35 does not apply to them. This is a great way to take the hassle and stress out of ensuring you aren’t caught out by IR35.
If you have decided this is the best route for you in 2021, the next step is to find an umbrella company that is the best fit for you.
Ready to find the best umbrella company?
There are many benefits to contracting and those that have been impacted by the global pandemic can follow our top tips to ensure they bounce back in 2021.
For many, working through an umbrella company will be the best option going forward, offering them a greater degree of security in an uncertain climate. After all, an umbrella company offers contractors a range of benefits, paying them a salary, taking care of invoicing, offering exemption from IR35 to entitling them to statutory benefits.
