Decoding IR35
Are you caught up in the world of IR35 regulations?
Introduced back in 2000, IR35 regulations aim to identify those who are ‘disguised as employees’ using limited companies to sidestep tax responsibilities. Now, it’s the companies determining your IR35 status, adding a layer of complexity and leaving many contractors in a state of uncertainty.
Figuring out if you fall under IR35 isn’t straightforward. There are many factors to weigh, like your work hours, your level of independence, where you work, and how many contracts you juggle. Navigating these regulations can be a bit like exploring a maze, but don’t worry; we’re here to lend a helping hand along the way.
How do you identify an IR35 company?
Possibly Within IR35
If you find yourself answering ‘yes’ to the majority of the following questions, it’s likely that you could have been considered an employee of your client for the specific contract, and thus subject to IR35 legislation:
- Work set hours or a set number of hours per week or month?
- Must do the work personally, without the ability to hire others?
- Subject to instructions regarding what, when, and how work is done?
- Paid by the hour, week, or month?
- Eligible for overtime pay?
- Work at the client’s premises or at locations they decide?
- Generally work for one client at a time?
Possibly Outside IR35
If you find yourself responding ‘yes’ to most of the following questions, it’s likely that you wouldn’t have been regarded as an employee of your client, and therefore, you’d fall outside the scope of the IR35 legislation:
- Have control over how work is done for the client?
- Can incur a loss on the contract?
- Provide essential equipment, not just small tools?
- Free to hire others on your own terms?
- Responsible for paying subcontractors?
- Correct unsatisfactory work at your own expense and time?
- Maintain multiple clients simultaneously?
Our Expertise, Your Solution
If you’ve found yourself inside IR35, we’ve got you covered with the Inland Revenue’s guidelines. IR35 is all about bringing your contract income into PAYE, but it doesn’t have to be a headache. We can help you calculate and process “deemed payments” through PAYE, making the whole process smoother. With Simon & Co by your side, you have a trusted ally to navigate these waters. Let’s work together to keep your financial management efficient, compliant, and tailored just for you.
Frequently Asked Questions
Explore our frequently asked questions to find valuable information on various business topics. Get the answers you need to make informed decisions about your business.
Being categorised as ‘inside’ IR35 entails paying full PAYE tax and National Insurance Contributions (NICs). According to the off-payroll working rules, this tax and NICs deduction is carried out directly at the source by the fee-payer, which is typically the recruitment agency. For contractors who aren’t governed by the reformed rules, this payment is made through the self-assessment process.
It’s essential to differentiate between being ‘caught inside IR35’ as a result of an HMRC investigation and providing services for a role that is deemed to be ‘inside IR35’ from the outset.
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