 |
What is
IR35
IR35 is the name given to the tax and national insurance legislation that was introduced in the UK on 6th April 2000 and which affects all workers in the UK who provide personal services. The government's intention has been to bring the level of tax on people working through personal service companies in line with tax on the earnings of permanent employees.
Under IR35 it is now much more onerous and financially less beneficial for freelancers to work under their one man limited company like they once did.
The decision as to whether or not a contract will be caught under IR35 will be based on an evaluation of all the relevant factors. Unfortunately, there is no clear guide as to what factors are more or less relevant in each case and the ultimate decision will refer t o case law where the tax payer and tax inspector are in disagreement.
If a contract is outside IR35 individuals can continue to pay themselves a small salary and take the rest of their income in the form of dividends, which is national insurance efficient.
If a contract is caught by IR35 the income from that contract is taxed largely the same as an employee. This can reduce by several thousands of pounds a year the net income from the contract.
Our approach
to IR35
We look at all our clients individually to assist them in evaluating their
IR35 status.
We can offer an informal opinion based on our experience in dealing with HM Revenue & Customs as to whether as contract is likely to be caught. If a more formal review is desired we can put clients in touch with employment law experts who have specialist knowledge in this area.
Where contracts are ‘IR35 caught’ we will calculate deemed salary payments as necessary
Whatever the situation we offer expertise to help you through the maze.
