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IR35 is a piece of tax legislation designed to target disguised employment for workers who provide their services to clients through their own limited company (known as an "intermediary" in the legislation). It uses a set of tests to find out if someone is genuinely in business on their own account or are working as a disguised employee of the client. Depending on the size of your client's organisation, it is likely that your client will be responsible for determining your IR35 status on any given assignment.
In this guide we'll answer some common FAQs asked by contractors, entrepreneurs or other business owners, so you know exactly what options you have available.
The simple answer is yes. If you are currently working through your own limited company you can continue to do so in the future, providing your end client has advised that your contract is outside IR35.
Yes but you’ll need to ensure that you pay the correct PAYE and NI. These are commonly referred to as ‘deemed’ payments and they can be managed through your limited company but it involves more complex accounting arrangements and is less efficient.
You can accept that assignment as an employee of your client or opt to use an umbrella company as your employer. You won’t need to close your limited company – you can operate a company and be an employee at the same time.
You should discuss this with your Agency, but an optimum solution is to maintain your limited company for your outside IR35 work and choose a reputable umbrella company to work through your inside IR35 contracts.
Choosing the right umbrella company gives you greater flexibility to handle short term assignments. Onboarding is quick and easy, you’ll get paid on time and be provided with payslips explaining how your pay and deductions have been calculated. All this and of course all your statutory rights as an employee.
No. Your limited company can stop trading until you need it again. You will still need to maintain all your filing requirements and submit Tax Returns.
You should discuss this with your accountant. It may be beneficial to keep your company going and withdraw dividends over a period of time or close it and withdraw all the funds at once. A tax-efficient exit is usually possible, but you need to take advice tailored to your personal circumstances. PayStream’s Tax Advisory team can help with this review if required.
Our IR35 portal, which was named the UK's Best Contractor Innovation at The Contracting Awards 2020, makes completing an IR35 review quicker and easier. It also leaves an audit trail of the outcome and supporting documents, ready for you to refer back to later.
IR35 Comply: our review service
If you're a contractor who can work outside of IR35, or any other freelancer or entrepreneur, then trading through your own limited company could be a great option for you.
Here we provide an overview explaining your responsibilities as a company director along with how our accountancy services can help by providing tailored and pro-active advice.
Alternatively, if your circumstances are more suited towards operating as sole trader business or a partnership, our tax team can help you understand and offer you advice.
Speak to one of our experienced New Business consultants today to discuss your options.
