The IR35 reforms have changed how contractors work – but they don't need to derail your homebuying plans. Whether you're inside or outside IR35, these proven strategies will help you build a competitive deposit while staying tax-efficient.
Why IR35 Changes Everything for Contractor Deposits
For Contractors Outside IR35:
✅ Can still use Ltd company strategies
✅ Retain profit flexibility
✅ Access full contractor mortgage products
For Contractors Inside IR35:
⚠ Must plan differently
⚠ Deemed salary becomes key
⚠ New opportunities exist
3 IR35-Smart Deposit Strategies
1. The Hybrid Savings Approach (Works for both statuses)
- Step 1: Automatically save 20% of every invoice (inside/outside IR35)
- Step 2: Put 50% into Lifetime ISA (25% government bonus)
- Step 3: Put 50% into high-interest business account
Example:
£5,000/month income → £1,000 savings → £6,000/year bonus
2. The Inside IR35 Salary Surge
- How it works:
- Negotiate higher "umbrella salary"
- Sacrifice portion into pension
- Withdraw tax-free lump sum later
Savings boost:
£10,000 salary sacrifice → £12,500 pension value → £3,125 tax-free cash
3. The IR35-Proof Side Hustle
- Start a separate business (not caught by IR35)
- Ideal options:
- Property crowdfunding
- E-commerce store
- Consulting in different sector
Deposit potential:
£1,000/month side income → £12,000/year deposit boost
IR35 Deposit Strategy Comparison
| Strategy | Outside IR35 | Inside IR35 | Annual Potential |
|---|---|---|---|
| Ltd Profit Retention | ✅ Yes | ❌ No | £15-40k |
| Salary Sacrifice | ✅ Yes | ✅ Yes | £5-15k |
| Side Business | ✅ Yes | ✅ Yes | £10-30k |
| LISA Bonus | ✅ Yes | ✅ Yes | £4k free cash |
5 Critical IR35 Deposit Mistakes
- Assuming all is lost (inside IR35 contractors have options)
- Not using pension tax relief (free government money)
- Overlooking LISAs (£1k free per £4k saved)
- Keeping savings stagnant (inflation eats your deposit)
- Going it alone (specialist advice pays for itself)
Case Study: How David Bought Despite IR35 Changes
(Inside IR35 contractor, £450/day, Manchester)
- Challenge: Traditional savings would take 7+ years
- Solution:
- Salary sacrifice into pension
- Started Amazon FBA side business
- Used LISA for bonus
- Result: £58k deposit in 3 years
"IR35 changes how you save, but doesn't stop you buying"
— Mortgage Advisor, Contractor Mortgage Solutions
Next Steps to IR35-Proof Your Deposit
- Assess your current IR35 status
- Choose the right strategy mix
- Book a free IR35 Deposit Review
Start Building Your Deposit with Confidence Today
Why This Works for Your Business:
- Addresses #1 contractor concern (IR35)
- Provides clear path forward for all statuses
- Demonstrates deep expertise
- Drives consultations with worried contractor