Our contractor accountants at ICS have put together a full guide to IR35 which covers all of the FAQ’s we receive from contractors. We've also created an IR35 tool to help assess a role and provide options, whatever the outcome.
Download our FREE IR35 Guide using the form below or contact us for IR35 advice and guidance
How Does IR35 Legislation affect you?
IR35 legislation came into force with the Finance Act of 2000. Its purpose is to determine if contractors are “disguised employees”.
IR35 in 5 Quick Points
- IR35 determines whether or not contractors are ‘disguised employees’ or are, in fact, self employed.
- IR35 outlines your employment status and how much tax you must pay.
- If you are ‘inside IR35’ it means that, as a contractor, you are liable for full PAYE and NIC’s.
- IR35 is determined on an assignment by assignment basis and can change on each contract.
- Being ‘inside IR35’ doesn’t mean you can’t work through a limited company.
Our IR35 audit is a vital stage in allowing our contractors to determine their correct employment status if they operate through a personal service company [PSC]. From April 2020 if your end client is a medium or large buiness in the UK it will be their responsbility to determine your IR35 status. We can support you, your agency and the end client with this upcoming change so please contact us.
IR35 is a complex piece of legislation and the government set up both the Office for Tax Simplification and the IR35 Forum to review IR35. In May 2012 they launched the ‘IR35 Business Entity Test’ via HMRC, which was withdrawn in 2015. In the 2016 Autumn Statement, the chancellor confirmed that from April 2017, in the public sector only, IR35 status would be determined by the client, not the contractor. To support this change they also created the "Check employment status for tax tool", commonly referred to as the CEST Tool. It seemed only a matter of time until the same rules were applied to the private sector and that announcement came in the 2018 Budget with a delay for implementation until April 2020. There’s an exemption for end-clients who are ‘small businesses’ as defined by the Companies Act 2006 which means meeting two or more of the following criteria:
- Annual turnover < £10.2 million
- Balance sheet total < £5.1 million
- < 50 employees
Where the end-client meets two or more of these criteria, responsibility for determining the IR35 status of a contract remains with the PSC and the changes do not apply.
With the investigation of many IR35 cases still continuing, it is important that contractors are fully aware of their IR35 status. To avoid being caught up in an investigation by HMRC, download our FREE IR35 guide or contact us today for some free advice and to discuss your needs.
You can find up to date IR35 news on the ICS blog.
Download our Contractors Guide to IR35
Thank you for requesting the ICS IR35 Guide. Click here to download the brochure.
If you would like to speak to someone during office hours please call freephone 0800 195 3750.