Written by Peter Harrison

A top contractor accountant has revived calls made around the last Budget for the tax rules around training to be made more ‘contractor-friendly.’

If they aren’t, and forthcoming Budget 2018 ignores the contractor training tax regime, shortages of IT skills are increasingly likely to start stunting growth, fears SJD Accountancy.

The potential problem is acute in Newcastle, where the accountant tots up pay to be up by a hefty 22%, as end-users hungry for IT skills have resorted to premiums just to get the basics.

“The shortage of tech skills in the North East increasingly has the potential to hamper growth,” warned SJD, which is asking the government to explore boosting IT skills development.

“We have long argued that there should be some sort of tax incentive for IT contractors to invest in training and personal development.”

As many IT contractors can end up working for several businesses in a single year, they often “play a vital role in transferring skills between organisations,” said SJD’s CEO Derek Kelly.

Despite this, he pointed out that such freelance tech professionals “are not eligible for staff training, and the cost of training they incur themselves is not a tax allowable expense.”

“The North East is now the fourth highest paying region in the country for tech skills,” the accounting boss added.

“The long-term presence of Sage in Newcastle gave start-ups a ready-made skills base to tap into… [but] as demand for tech skills has increased, the local talent pool has dried up”.

Evidencing the upwards effect on pay, SJD calculated that IT professionals in the North East last year commanded £40,559, compared with £33,225 a year in 2012.

By comparison, pay for IT professionals in London increased by just 8.9%, from £45,930 to £50,000 over the same period.