Making IR35 easy to understand
IR35 affects all contractors and freelancers in the UK, so it's essential you find out if you are outside or inside IR35.
If you're inside IR35, you will have to use an FCSA or Professional Passport compliant Umbrella company for your payroll solution.
At Unified Payroll, we have many years of experience dealing with IR35 taxation issues and have a comprehensive portfolio of services available to contractors working across all sectors.
When it comes to IR35 legislation, there's so much information around that it's hard to know what's important. That's why we've created this page as a short guide to the key terms of IR35 for you.
What is IR35?
IR35 refers to the United Kingdom's anti-tax avoidance legislation designed to combat what HMRC saw as tax avoidance by “disguised employees” and the firms hiring them.
What is a disguised employee?
Essentially a worker, who supplies their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.
Who does IR35 affect?
Contractors operating through their own Limited company, recruitment agencies and end clients. If you are caught within the legislation and identified as a “disguised employee” then you can expect to pay about 25% more in tax every year, so you want to try and ensure that it does not apply to you!
When does IR35 apply?
The IR35 should be applied to every new contract and contract extension.
How Unified Payroll help?
At Unified Payroll we can help you determine your IR35 status by analysing your contract and working conditions, offering tax saving advice.
If you are found to be inside IR35, through our excellent value umbrella we can set you up quickly to receive PAYE earnings, along with other benefits of being a full-time employee, whilst retaining your status as a contractor.
We operate a PAYE umbrella scheme where all our employees are deemed to be working within IR35 and under the supervision, direction and control of the end client. As such their whole income is subjected to all applicable statutory deductions that include:
- PAYE Tax
- NI Contributions (including Employer NI)
- Apprenticeship Levy
- Pension Contributions
- Holiday Pay
- Student Loan Repayment, and any other statutory deductions required.
All net wages due to you as the worker are paid into your personal UK based bank account in GBP (Pound Sterling). This means you cannot be paid by us via your limited company or personal service company, we will pay you as our employee.
However, if you are a genuine professional contractor, freelancer, interim or consultant who is in business on your own account, you should have nothing to fear from IR35. You need to find out from your agency if your working arrangements are outside IR35 and they will advise you accordingly. This is so long as you take the time to understand how the legislation works and apply best practice to ensure it does not apply to you, and have a defence prepared if investigated by HMRC.
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