What Is IR35?
IR35 is the UK anti-tax avoidance legislation coming into effect April 2021. The pending IR35 changes are designed to combat what HMRC saw as tax avoidance by disguised employees and the firms hiring them. HMRC discovered that disguised employees were using limited companies to avoid tax when in practice, they were working as employees for the client company.
IR35 determines the employment status of a fixed-term contractor or freelancer. All fixed-term contractors and freelancers issued with contractual assignments must have the end client determine if their job role is inside or outside IR35. The IR35 status of a contractor will determine the scheme used to pay tax, take-home pay and expenses.
If a contractor is identified as inside IR35, they would need to be paid using the PAYE (Pay As You Earn) scheme meaning income tax and NICs (National Insurance Contributions) need to be collected and reported to HMRC.
If a contractor is identified as outside IR35, they can be paid as self-employed or as a PSC (Personal Services Companies). A PSC is a limited company providing a service and is generally a one-person company, with tax being calculated at a later date.
Determining the IR35 status of a contractor is complicated and complex, but HMRCs online CEST tool can help end clients determine the IR35 status of contractors. In general, IR35 will not apply if your contract is for services rather than employment.
Your contract specifically mentioning the following principles, determines your IR35 status:
- SDC (Supervision, Direction and Control) - this involves how much say the hirer/end-user has over how your work is completed.
- Substitution - are you the only person who can complete the work or are you able to bring in someone else to do the work.
- MOO (Mutuality of Obligation) - is the end-client obligated to provide you with work, do you have to accept it, is money paid to you if no work is performed.
How Unified Payroll Can Help With IR35?
Using Unified Payroll as your PAYE (Pay As You Earn) umbrella company gives you confidence that you are using a payroll service that follows IR35 and HMRC guidelines. Our FCSA (The Freelancer and Contractor Services Association) and Professional Passport accredited umbrella company will ensure you will not have any unpaid tax bills or nasty surprises. We specialise in paying contractors inside IR35, with our expert team available to answer any question you may have.
Our PAYE umbrella payroll service has a reputation for compliance and trust with three of our expert teams guiding you through our enrolment process and providing an outstanding payroll service.
Our sales team take time to fully explain how PAYE umbrella payroll works, what deductions are made and how we calculate take-home pay. Our sales team will also explain our simple enrolment process and start the enrolment process if you decide to join us.
Our CIPP (The Chartered Institute of Payroll Professionals) trained payroll team use their payroll expertise to ensure your payroll is correctly processed on time, every time.
Our customer service team offer an unrivalled service to quickly and efficiently answer any payroll related questions you may have. Our versatile approach will ensure you receive tailored support, so whether you prefer to speak to a specific account manager or any member of the team, our customer service team will help.
Our PAYE umbrella payroll service ensures the following deductions are considered and applied according to your circumstances:
- PAYE Tax,
- NI contributions (including Employer NI),
- Apprenticeship levy,
- Pension contributions,
- Holiday Pay,
- Student loan repayments,
- and any other statutory deductions required.
Contractors inside IR35 use our payroll service because:
- We ensure all contractors are paid into UK bank accounts.
- We ensure all contractors have the correct documentation to work within the UK.
- We adhere to the modern slavery act.
- We value every contractor that uses our service.
If you have any questions about joining our PAYE umbrella scheme, HMRC guidelines, IR35, or AWR legislation, you can contact our expert sales team.
Our sales team are available Monday to Friday from 9 am to 5 pm.
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Please note - Your take-home pay calculation is an illustration and it is based on assumptions.