IR35: stay in the loop
In order to guide and advise our clients, workers and contractors, we have put together a guide to IR35 and what you need to know.
What is IR35?
The IR35 legislation was first introduced in April 2000, and is formerly known as the ‘Intermediaries Legislation’. IR35 was designed to combat tax avoidance by workers and the firms hiring them who are supplying their services to clients via an intermediary such as a limited company.
What does 'inside IR35' mean?
To be deemed ‘inside IR35’, you are considered, for tax purposes, an employee of your end client and therefore subject to PAYE. If you are operating ‘inside IR35’, you need to ensure that the appropriate taxes are being paid, which usually involves a ‘deemed payment’ of income tac being made at the end of the tax year.
What does 'outside IR35' mean?
To be deemed ‘outside IR35’ means that you are operating as a genuine business, and therefore operating outside of the IR35 rules. If you are operating ‘outside IR35’ you are able to pay yourself a salary, draw the remainder of income as dividends, and remain responsible for your taxes as usual.
What does IR35 mean for your business?
From April 2021 onwards, the government have extended the IR35 reforms to the Private Sector, following the public sector reforms in 2017. The changes do not apply to small companies, defined as meeting two of the following three criteria turnover of no more than £10.2m; balance sheet total of no more than £5.1m; or no more than 50 employees.
If the work is determined to be inside IR35, the business, agency or third party that pays the contractors limited company for services will become the ‘fee payer’ and will be responsible for deducting all taxes including income tax, employee NICs and pay employer NIC and pay employer NICs to HMRC.
Businesses engaging contractors are responsible for assessing and determining the employment status of the individual and disclosing whether they are outside of IR35 to the HMRC.
How Can We Help?
We have partnered with an award-winning consultancy firm to provide a comprehensive IR35 solution that manages the entire process from status assessment to process consultation, so you can compliantly maintain your flexible workforce outside IR35.
Our IR35 status tool provides fast, efficient and accurate IR35 assessments.
Download the brochure to find out more about the tool.
Download The Brochure
Download the guide and take it with you so you can share it with colleagues or employees. Learn about our IR35 status tool and the amazing benefits for your business. Make sure you have a fair, efficient process in place.