If your contracts are caught by the IR35 rules, the financial impact will be considerable. Here, we look at the tax difference you will incur if you are inside or outside IR35.
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ir35
It is, unfortunately, the case that IR35, Public and Private Sector off-payroll rules are something of a minefield. It’s a complex area of tax law so it is not surprising that contractors and freelancers get confused and struggle to understand all the implications.
[continue reading…]You’ll be aware that HMRC is bringing in new, stricter rules around using contractors and consultants, known as IR35 effective April 2020. These new rules are intended to stop contractors, freelancers and consultants being used as “disguised employees” to avoid paying tax and benefits.
[continue reading…]Changes to IR35 tax rules for contractors may only be two months away, but most contractors remain confused about what the changes will mean – and whether they need to do anything before the 6 April implementation date.
[continue reading…]Chancellor of the Exchequer Philip Hammond stayed away from big bold giveaways in his Autumn statement, but the Budget contained plenty for businesses to digest.
IR35 takes its name from an Inland Revenue press release which heralded the birth of new measures (The Intermediaries Legislation) aimed at preventing the use of intermediaries purely for the purpose of avoiding paying income tax and National Insurance.
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In this article, we look at the tax benefits of a limited company and drawing down income in the form of dividends as well as salary.
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Limited company owners, particularly contractors, who want to protect themselves in the event of an HMRC status enquiry may decide to take out tax investigation cover. This is sometimes referred to as ‘IR35 Insurance’. Qdos is one of the leading providers of this type of policy.
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In this article, we look at why IR35 was implemented, and what steps contractors should make to ensure they comply with the IR35 rules – including using professional contract review services, and taking out IR35 insurance.
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The expansion of the IR35 legislation to include ‘office holders’ – the first ever statutory change to the Intermediaries Legislation – should not be a concern for ‘genuine’ contractors, says a leading accountant.
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A new draft clause for inclusion in the Finance Bill 2013 explicitly extends the scope of IR35 to ‘office holders’ for the first time.
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Following the introduction of new IR35 enforcement measures in May 2012, and ongoing efforts to clamp down on personal service companies in the public sector, it may come as some surprise that only a few lines in the supporting Autumn Statement documentation even mention ‘IR35’.
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With little room to manoeuvre given the country’s ongoing economic problems, the Chancellor managed to provide some good news to company owners in today’s Autumn Statement, with a ten-fold increase in the Annual Investment Allowance, and the scrapping of the unpopular ‘controlling persons’ proposals. On the flip side, pension tax relief has been reduced for higher rate taxpayers, and income tax thresholds will not rise in line with inflation.
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When deciding between contracting via an umbrella or limited company, the main factors to consider are typically; the tax differences between the two structures, your IR35 status, and how much perceived ‘paperwork’ is involved. One service provider says that 50% of umbrella company contractors would be better off by incorporating.
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The BBC has published a report into how it currently engages freelance contractors, and will introduce changes from April 2013 which are likely to reduce the number of freelancers hired via their own personal limited companies.
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Data obtained via a Freedom of Information request shows that the number of IR35 investigations has risen markedly over the past two years, as HMRC steps up its anti tax-avoidance activity.
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Following the implementation of new ‘off payroll’ remuneration rules by public sector bodies, a leading provider of IR35 solutions (Qdos) has created a public sector contractor package which includes contract reviews and a certification pack to demonstrate compliance with the new requirements.
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Despite the massive cost-cutting measures implemented by Government bodies over the past year, the demand for public sector IT contractors appears to have levelled out according to statistics derived from the leading IT jobs boards over the past year.
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The UK’s leading contractor organisation, PCG, has issued some practical steps for contractors engaged by public sector bodies to follow when dealing with new ‘off payroll’ remuneration guidelines which are due to take effect in September.
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Bauer & Cottrell, which provides employment status services to limited company owners – particularly contractors, says that its first experience of HMRC’s new IR35 administration efforts was a positive one, with a client being declared free of IR35 within three weeks of a technical submission being made.
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