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What is Hiring Outside IR35?
Before we get into the benefits of hiring outside IR35, let’s clarify what hiring outside IR35 means.
IR35 is a piece of UK tax legislation designed to prevent tax avoidance by companies who require services (or contractors who provide them) but who would otherwise be considered employers/employees.
If a contractor is “inside IR35,” they are treated as an employee for tax purposes, meaning higher tax and National Insurance Contributions (NICs). Conversely, if a contractor is “outside IR35,” they are regarded as self-employed, allowing them to pay themselves in a more tax-efficient way, often through dividends.
Hiring outside IR35 involves engaging a contractor who is deemed to be genuinely self-employed. This means they manage their own business affairs, are responsible for their own taxes, and work with a higher degree of independence from your business.
Hiring a Freelance E-Commerce Manager Outside IR35
Running a small or medium-sized business (SMB) can be a juggling act, especially if you are at the early stages of your e-commerce operations.
Imagine: your online sales are growing, but your in-house team is struggling to keep up with the technical demands of managing your e-commerce platform.
Your web development agency and your digital marketing agency ask you questions you don’t have time to find out what they mean.
In a classic chicken and egg scenario, a weak digital sales channel might not justify hiring a dedicated e-commerce employee. At the same time, lacking specialist e-commerce knowledge might result in weak digital sales.
You need the expertise of a specialist hitting the ground running at a reasonable cost. That’s when hiring a freelance e-commerce manager outside IR35 makes perfect sense.
Let’s dive into why this could be a brilliant move for your business.
The Advantages of Hiring Outside IR35
Cost-Effective Expertise
Hiring outside IR35 allows you to bring in a freelance e-commerce manager only when you need them. You’re not on the hook for a full-time salary, benefits, or office space. Pay for what you need, when you need it.
Flexibility
Need help for a specific project, like a website overhaul? Freelancers can be brought on for short-term gigs, giving you the flexibility to ramp up or down based on your business needs.
Specialised Skills
Freelance e-commerce managers often have a wealth of experience from working with various clients. They bring specialised skills and fresh insights that can help take your online business to the next level.
Quick Onboarding
Unlike hiring a permanent employee, bringing in a freelancer is usually a quicker process. They’re used to hitting the ground running, which means less downtime and more immediate impact on your projects.
Reduced Administrative Burden
Since freelance e-commerce managers are self-employed, you won’t have to deal with payroll taxes, pension contributions, or other employee-related administrative tasks. This can reduce your HR workload.
Trial Without Commitment
Not sure if you need long-term help? Hiring outside IR35 lets you test the waters. If it turns out you need ongoing support, you can extend the contract or look into a more permanent solution later on.
How It Works
Hiring outside IR35 involves engaging a freelance e-commerce manager as an independent contractor, rather than an employee. This means they’ll be responsible for their own taxes and National Insurance Contributions. To ensure the contractor is genuinely outside IR35, certain factors are considered:
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Control:
The freelancer should have autonomy over how, when, and where they complete their work. You’ll agree on the project scope and deadlines, but they’ll decide on the methods.
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Substitution:
The contractor should have the option to send a substitute to do the work if necessary. This indicates that they are not personally obliged to complete the task.
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Mutuality of Obligation:
There should be no obligation for you to provide continuous work, nor for the freelancer to accept it. Projects are usually defined with clear start and end points.
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Financial Risk:
Freelancers typically invest in their own equipment. This demonstrates their financial independence.
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Integration:
The contractor should not be integrated into your company’s day-to-day operations like an employee. They should not use your facilities regularly or participate in staff functions.
By understanding and adhering to these criteria, you ensure that your hiring practice aligns with the outside IR35 status, providing a clear distinction between a contractor and an employee.
Making the Move
So, if your SMB needs e-commerce expertise but you’re not ready to commit to a full-time hire, consider hiring outside IR35. You’ll get the specialised skills you need, on your terms, without the long-term commitment.
Ready to take your e-commerce game to the next level? Netsu’s e-commerce consultants might be the right place to start from. Drop us a message today!
