Contracting is a growing feature of actuarial work. With the increased demand for actuarial contractors in Ireland there has been a steady flow of actuarial talent from the UK. Irish and UK Actuarial contractors operate through company structures (either personal or umbrella companies). They then bill the relevant recruitment agency, and the agency bills the client. On the face of it there is no difference in the processing of a UK or Irish actuarial contractor.
However, look under the bonnet and the two systems are completely different. UK contractors pay themselves through a dividend structure minimising their income tax liability. In the UK the tax due on dividend payments is much lower than income tax. Irish based contractors pay income tax just like anyone else, but at a director level. In 2017 the UK government brought in a new tax framework to combat what it sees as tax avoidance by UK contractors. IR35 is aimed at contractors who supply their services via a Personal Service Company (PSC) that potentially masks an employee-employer relationship. Since 2017, it has been the contractor’s responsibility to assess if they fall within IR35. The consequence of falling within IR35 is increased income tax and National Insurance (PRSI equivalent) for the contractor – not a move welcomed by contractors!
As of 6th April 2021, the hiring entity is now responsible for assessing if a contractor is subject to IR35. The subsequent shortfall in tax payments and possible penalties for avoiding tax will also be the hiring entities responsibility. What has this to do with Irish employers you may ask. Well, if the hiring organisation in Ireland has any connection to a UK company and they have a UK contractor working either remotely from the UK or in Ireland through a UK vehicle, then unfortunately there is a risk of liability for the IR35 tax and penalties. Of course, most insurance entities in Ireland have some sort of connection to a UK company so any Irish based actuarial hiring manager engaging contractors should be aware of this new tax regime. There is a useful free tool on the UK government website which will give a guide as to if the contract is likely to be assessed as subject to IR35. This can be accessed at https://www.gov.uk/guidance/check-employment-status-for-tax. Incidentally, one of the metrics for assessing if a contractor is a “masked employee” is if the hiring organisation supplies the contractor with a computer!
IR35 does not mean that you cannot engage with UK contractors. Where the contractor is working through an umbrella company and is paying NI and tax as an employee of the umbrella company then there is no issue here.
If the contract work is being carried out in Ireland and neither the hiring organisation nor the recruitment firm is connected to a UK company (agency or employer), then IR35 will not apply. In this instance IR35 has nothing to do with the Irish contract. Raretec Recruitment is a privately owned 100% Irish recruitment company and has no connection to any UK company. If you need further information on IR35 or if you need help recruiting actuarial contractors, then call us today on 015311400 and ask for Jacqui van Teutem (Non-life) or Carina Devlin (Life and Investments). We are always happy to help you.