IR35 (or the off-payroll working rules) is meant to make sure contractors pay the right amount of tax. <\/p>\n\n\n\n
It comes into play to stop contractors working \u201clike an employee\u201d \u2013 expected to work designated days and hours, with extensive management \u2013 but still enjoying the tax efficiency of a limited company. <\/p>\n\n\n\n
Here\u2019s everything you need to know to make sure you\u2019re complying with IR35 rules.<\/p>\n\n\n\n
IR35 is another name for the off-payroll working rules. The term \u2018IR35\u2019 refers to the press release that originally announced the legislation in 1999.<\/p>\n\n\n\n
Self-employed IR35 rules are designed to work out whether a contractor is someone who\u2019s genuinely self-employed rather than a \u2018disguised\u2019 employee, for the purposes of paying tax.<\/p>\n\n\n\n
That\u2019s because contractors who set up and work through a limited company<\/a> enjoy some tax efficiency. While they don\u2019t usually get employee benefits (like holiday and sick pay), they have flexibility and control over their work.<\/p>\n\n\n\n Some contractors try to take advantage of this tax efficiency by appearing self-employed on the surface, when they\u2019d actually be an employee were they not providing their services through their limited company. The off-payroll working rules are designed to tackle this, but they aren\u2019t without their problems.<\/p>\n<\/div>\n\n\n\n When a contractor is a \u2018disguised\u2019 employee, they\u2019re taking advantage of the tax efficiency of working through a limited company, but otherwise they should be classed as an employee.<\/p>\n\n\n\n Consider the example of an employee who quits their job, leaves on the Friday and starts back at the company in the same position on the Monday, but as a contractor working through their limited company. Has the arrangement changed in any material way?<\/p>\n\n\n\n \u2018Disguised\u2019 arrangements benefit employers too, because they don\u2019t have to pay employers\u2019 National Insurance contributions (NICs) or give any employee benefits to contractors.<\/p>\n\n\n\n So self-employed IR35 rules tackle those arrangements by testing the contract itself, working out whether it\u2019s \u2018inside IR35\u2019 or \u2018outside IR35\u2019:<\/p>\n\n\n\n IR35\u2019s nuances mean that contractors can\u2019t be expected to know the law inside out. Please only use this article as a guide \u2013 if you\u2019re unsure about anything, seek professional advice<\/strong>.<\/p>\n<\/div>\n\n\n\nWhat is a disguised employee?<\/h2>\n\n\n\n
Inside and outside IR35 \u2013 what’s the difference?<\/h2>\n\n\n\n
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