When it comes to hiring a professional to work on a project or fill a role within a company, there are two main options available: a contractor and an interim manager. Both have their own unique set of pros and cons, and it’s important to consider the specific needs of your company and project when deciding which one to hire. One key consideration when hiring a contractor or interim manager in the UK is the IR35 legislation, which affects the tax status of these professionals.
A contractor is typically self-employed and works on a project-by-project basis. They are usually hired to complete a specific task or set of tasks, they often require some kind of line management but mostly can work unsupervised. Contractors are not considered an employee of the company they are working for. This sometimes means that the company does not have to pay employer’s national insurance contributions, and the contractor is responsible for their own taxes and national insurance contributions. One of the main advantages of hiring a contractor is that they are often highly skilled and experienced in a specific area, making them a valuable asset to a company. They also have the flexibility to work on different projects and with different companies, which can be beneficial for both the contractor and the company.
However, the main disadvantage of hiring a contractor is that they are not considered an employee of the company, which can make it difficult for the company to control the work they are doing. This can also make it difficult for the company to provide support and training for the contractor like they would an employee. IR35 legislation can also be an issue for contractors, as it is designed to prevent workers from falsely categorising themselves as self-employed in order to avoid paying taxes. If a contractor is found to be in violation of IR35, they may be required to pay back taxes and national insurance contributions, which can be costly for both the contractor and the company.
An interim manager is similar to a contractor, but they are typically brought in to either fill an executive role within a company or to support the executive team to lead the company through planned or forced change. They are usually highly experienced and skilled professionals and they can provide valuable expertise and guidance to a company and its leadership team. One of the main advantages of hiring an interim manager is that they can provide a quick and effective solution to a specific problem or need within a company. They can also bring a fresh perspective and new ideas to the company, which can be beneficial for both the company and its shareholders.
However, the main disadvantage of hiring an interim manager is that they are not considered an employee of the company, this can mean that unless they are openly supported by the board some employees of the business will choose to resist the change that the Interim Manager is delivering. IR35 legislation can also be an issue for interim managers, as it is designed to prevent workers from falsely categorising themselves as self-employed in order to avoid paying taxes. If an interim manager is found to be in violation of IR35, they may be required to pay back taxes and national insurance contributions, which can be costly for both the interim manager and the company.
In conclusion, hiring a contractor or an interim manager can be a great way to bring valuable skills and expertise to a company, but it’s important to consider the specific needs of your company and project when deciding whether to hire an interim manager or contractor as they have differing skills, toolkits and approach. Both contractors and interim managers have their own unique set of pros and cons, and IR35 legislation can also be an issue for both of them. It is always advisable to consult with professionals like credible interim management providers or an accountant to have a clear understanding of the tax implications for hiring either a contractor or an interim manager before you interview.