Tax legislations can be utterly mind-boggling especially if you’re uncertain whether or not they should apply to you. In our previous blog we explained VAT and how to work out if you should be VAT registered. This week we’re venturing into the world of the IR35 legislation, helping you get to grips with how it might affect you.
So what is IR35?
The IR35 tax legislation (also known as intermediaries legislation) is designed to tax ‘disguised employment’ at a rate similar to employment.
How might IR35 affect you?
The IR35 tax legislation will affect both your tax and National Insurance if you’re contracted to work through an intermediary (e.g. your own limited company or a partnership such as working with your partner or spouse, workers in the construction industry are also often affected by IR35).
The IR35 legislation is designed to ensure that the right rate of tax and National Insurance is paid. This often means that the intermediary must operate PAYE and National Insurance contributions on any salary or wages it pays throughout the tax year, and is something which must be done correctly to avoid negative legal implications. For more in-depth information on IR35 you can visit the government website.
Why is IR35 important to understand?
With increasingly more employees being asked to give up their employment and invoice from a limited company it’s even more essential to understand the pros and cons of IR35.
Disadvantages of IR35
Advantages of IR35
Feeling uneasy when it comes to IR35?
The simple solution is to talk to a professional accountant. Here at the Chichester Accountants we’ve helped numerous contractors navigate the IR35 legislation. We’re able to analyse your contract to identify whether you’re at risk of being affected by IR35, we’ll also advise you con compliance, insurance and when necessary we’re able to contact HMRC on your behalf. Just get in touch on 01243 532490 or email email@example.com.
This blog was written by Monica Jervis, small business owner, founder of the Chichester Accountants and qualified accountant. If you’ve got any questions don’t hesitate to get in contact on Twitter, Facebook or Google+.
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