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HSJ Article – Follow up

In my last blog I wrote about a recent HSJ article, which cited a fourfold increase in the number of requests by trusts to engage off payroll executives. A couple of people had emailed me since asking me about part of my comment for the article, that day rates may increase after next April.

It wasn’t explicitly mentioned in the article, but I was referring to the changes proposed by the government for agencies or end clients to determine the IR35 status of interim managers. More detail can be found in my blog from March which I published shortly after George Osborne’s budget statement. The interim management industry still awaits the release of the HMRC online evaluation tool, but it seems likely that many interims who have previously declared themselves out of scope will now be found in scope, and I think particularly at risk will be those interims who routinely cover vacant permanent posts within organisations. Within that cohort there may be a good proportion that decide interim working is no longer financially viable as their income is subjected to income tax and NI, instead of being drawn in a low salary high dividend format. Supply will shorten as candidates leave interim management and in the short term day rates may ironically start to rise. How this squares against price caps in anyone’s guess, but if you are accustomed to earning 600 /day as an interim General Manager, and your rate under price caps is now c. 350 AND subject to income tax and NI, your business model is no longer financially viable. An exodus of these type of candidates from interim management could shorten supply and drive up prices, and the force of price increases could completely overwhelm and ultimately condemn price cap policy.

Making a decision to leave the market, or hold tight and potentially be part of a smaller supply pool enjoying renewed rate increases, is a difficult one and probably premature at the moment, the market continues to function reasonably well and not all NHS organisations are fully complying with price cap guidance. But if it comes to it, and the government fully implements the proposed IR35 determination changes in April 2017, and price cap policy still prevails, then interims may need to consider their financial position, their breakeven point in terms of price, their access to opportunities, their versatility against different role briefs, and also their risk appetite to ultimately decide whether or not to stay in the market.