Making sense of IR35

Making sense of IR35


IR35 began as tax legislation in 2000 to identify individuals who were not paying the appropriate tax.

The law was specifically aimed at contractors who HM Revenue & Customs considered were working as full-time employees while benefiting from the tax advantages of being self-employed.

Change in legislation from April 2021

It was previously the contractor’s responsibility while working in the private sector to determine their IR35 status, regardless of whether they were operating as a limited company or through an agency.

However, since April 2021, the duty to make this determination has shifted from the contractor to the end client, which will typically be the engager of a contractor’s services or the recruitment agency through which they are contracted.

All medium and large businesses are now accountable for determining the IR35 status of contractors and paying the appropriate taxes and national insurance contributions via PAYE.

Most importantly they, and not the contractor, are held liable if HM Revenue & Customs determines a contractor’s IR35 status has been incorrectly assessed.

The change does not apply if the end client is classed as a small business or the contractor is engaged through an umbrella company and already being taxed through PAYE.

We can help you whatever your IR35 status

Our limited company accountancy service is perfect if your assignment is ‘outside IR35’. We are also able to offer an umbrella service for those assignments considered to be ‘inside IR35’. Our specialist advisors are always on hand to guide you and provide you with the flexibility you need.

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