IR35
AM I AFFECTED BY IR35?
What is IR35?
The off-payroll working rules or IR35 legislation is designed to stop contractors working as ‘disguised employees’ by paying them in a similar way to that of a permanent employee. Disguised Employees are workers who do not meet the HMRC‘s definition of self-employed and should not be benefiting from the associated tax advantages that are typically achieved when a contractor provides their services through a personal service company (PSC).
Does it apply to all contractors?
The rules do not necessarily apply to all contractors. If you are working on your own without supervision, in your own business, with your own tools and equipment, providing services to multiple clients the rules may not apply to you. There is a ‘self-employed’ definition and ‘employment’ indicators that can help to determine your IR35 status. These tools can be difficult to accurately represent your situation, so you should discuss your options with a professional to obtain a clearer understanding.
Inside or outside?
If you are deemed to be ‘inside IR35’ this means that you do not meet the HMRC’s views on what constitutes as ‘self-employed’ and you will be required to pay PAYE tax.
If you are deemed ‘outside IR35’ this means that you do meet the HMRC’s views on what constitutes as ‘self-employed’ and can continue to operate as an independent contractor being paid gross for the work you complete.