What is IR35?

Designed to prevent the avoidance of Income Tax and National Insurance, IR35 describes two sets of tax legislation. This generally is found where firms hiring them the worker, who are supplying their services to end clients through an intermediary business, for example a limited company, without such the worker would be an employee of the end client if the limited company wasn’t used.


These workers are called deemed employees by the (HMRC), and if they call within the scope of  IR35, the workers have to pay Income Tax and National Insurance Contributions as if they were employed by the end client under normal PAYE circumstances. 


IR35 has been in force since April 2000 and is heavily criticised by tax experts and the business community as being poorly drafted, poorly implemented by HMRC and resulting in unnecessary costs and financial hardships for genuine small businesses.


As a result the Government is replacing the original IR35 legislation with the new Off-Payroll Tax, which was initially introduced into the public sector in April 2017, and will be extended to the private sector from April 2021.


You need to take time to understand the legislation to ensure that if you are a genuine contractor, freelancer, interim or consultant and you are genuinely running your own business, you should have nothing to fear in respect to IR35. Regardless of such you must be prepared to defend your position should an investigation from the HMRC take place.


Taking the correct steps when hiring contractors, where the new Off-Payroll Tax needs to be considered, which means wagecorp also has no need to fear the new legislation, as we take the appropriate measures when hiring and engaging our contractors.

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