What is IR35?

In a nutshell, IR35 came into effect in April 2000 and was designed to stop contractors working as disguised permanent employees i.e. benefiting from the tax advantages of being a contactor without accepting the increased responsibilities of company ownership. This means working with the same level of responsibility, control and liability expected of directors of other limited companies.

For example an IT worker may resign from their permanent role on a Friday, but return on Monday doing the same job, at the same company, same desk with the same manager. The only difference is they are now doing the job as an IT Contractor working through their own Limited company.

Due to the increased work, risks and responsibility there are certain tax advantages, for example  dividend payments (profits taken from your company) though a Limited company do not attract National Insurance contributions, which is fair enough as you wouldn’t be able to benefit from all the standard employee benefits such as holiday pay, sick pay, pension etc.

 

 

 

What is inside and outside IR35?

Essentially if you have the same benefits, responsibilities and control as a permanent employee, then you would more than likely be classed as inside IR35 (caught by IR35).  In summary some of the key factors that determine if you’re inside or outside IR35 are control, financial risk, substitution, provision of equipment (sometimes, especially in secure sites you may have to use a client side equipment), right of dismissal and employee benefits.

Many of the above will be detailed in your contract. However, it is best to remember that although HM Revenue and Customs will more than likely want to see your contract, your working practices must reflect what is in your contract. Please also be aware that you’ll read all sorts of information about IR35 and urban myths many of which aren’t true. So it is always best to seek professional advice (SJD would be happy to help, simply call our new client services team on 0500 152500 / 01442 275789 or email jaime.thorpe@sjdaccountancy.com).

Even if you are inside IR35 it may still be beneficial to work through your own Limited company, see this page for more information Inside IR35 working through a limited company. Or you may want to visit this page more advice on IR35 for ContractorsIR35 rules IR35 Business Entity Tests or IR35 Calculator.

How does IR35 affect me?

The easiest way to find your IR35 status is to have an IR35 Contract Review to determine whether you’re contract falls inside or outside of IR35. If you would like a free verbal contract review, please fill out the form at the bottom of this page and one of our friendly experts will call you back.

If you are at all worried by IR35 or have any further questions please call our IR35 specialists on Freephone 0500 152500 / 01442 275789 or email jaime.thorpe@sjdaccountancy.com. Alternatively, complete the below and we'll get back to you as soon as possible.

If you would like to have your contract reviewed please take a look our IR35 Contract Review Service.

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's Largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant* face to face.
  • Money back service guarantee. All your telephone calls and emails will be answered the same day or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee of £120 plus VAT per month.

If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com.

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own Limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.