Three different Tax Treatments
If you work as a contractor, there are three different possible tax treatments which could apply to your engagements depending on your circumstances. For contracts not subject to the off-payroll working (IR35) rules, whether working in the private or public sector, you will be in a position to withdraw profits on a very advantageous tax basis.
However, if working in the private sector and a contract is caught under the off-payroll working rules, much of this tax advantage is lost. Any work in the public sector covered by these rules means that the public sector body or agency will effectively treat you as an employee, despite the use of your intermediary company.
The Covid-19 crisis has hit many contractors quite badly, especially as most will have only received limited government support when compared to the help given to the self-employed. However, one positive outcome is that the crisis has resulted in the government postponing the extension of the public sector tax treatment to the private sector. The change was meant to have come in from 6 April 2020, but will now not happen until 6 April 2021.