The freelancing snag

Contractors and freelancers enjoy the freedom of being their own boss, picking and choosing their jobs and potentially making significant tax savings.

Working in this way means that contractors are subject to the same compliance, accounting, and tax obligations as any other business. Corporation Tax, VAT, PAYE and Self Assessment are all typically applicable to contractors.

Contractors who provide their services through a personal service company (PSC) may also be subject to IR35.

If a contractor’s assignment is deemed to fall ‘within’ the IR35 rules, it will be taxed as employed work, resulting in greater costs and reduced freedoms.

The freelancing snag

Contractors and freelances enjoy the freedom of being their own boss, picking and choosing their jobs and potentially make significant tax savings.

Offering their services in this way means that contractors are subject to the same compliance, accounting and tax obligations faced by any other business. Corporation Tax, VAT, PAYE and Self Assessment are all typically applicable to contractors.

Contractors who provide their services through a personal service company are also be subjected to IR35.

If a contractor’s assignment is deemed to fall ‘within’ the IR35 rules, the assignment will be taxed as employed work, resulting in greater costs and reduced freedoms.

What is IR35?

IR35 is a set of tax rules aimed at preventing tax avoidance through personal service companies and partnerships. You may also hear it described as “off-payroll” or “intermediary” legislation.

Its objective is to ensure that individuals who work like employees through an intermediary (such as their own company), are taxed like regular employees.

In theory, this prevents such individuals from gaining an unfair tax advantage.

In practice, it creates issues for contractors.

IT contractor testing cabling

Who does it apply to?

IR35 primarily applies to contractors who provide their services through a personal service company (PSC), the businesses that hire them, and the agencies and umbrella companies that facilitate the engagements.

It’s been a hot topic in both the public and private sectors for several years, attracting particular attention in the construction, IT and transport industries.

What does it involve?

The IR35 legislation sets out the requirements along the supply chain. These can be summarised as:

  • status determination: each assignment must be assessed to determine whether it falls inside or outside IR35

  • status agreement: the status must be shared and agreed along the supply chain

  • Payroll deduction: if it falls within IR35, the party paying the intermediary must deduct Income Tax and NIC

  • Employer’s NI: if IR35 is applicable, the fee-payer is responsible for paying Employer’s National Insurance

  • Payments: the fee-payer pays the PSC and, if IR35 applies, remits tax and NIC deductions & contributions to HMRC

  • Accounting: includes RTI payroll returns to HMRC and corresponding accounting entries for the relevant parties

Who is responsible?

The responsibility for these stages varies depending on the size of the end client and the nature of the supply chain.

Small end client

If the end client qualifies for the ‘small business exemption’, the contractor is responsible for both determining the status of the assignment and handling all related tax and National Insurance deductions.

Medium and large end clients

When a contractor provides services to a medium or large end client, the end client is responsible for determining the IR35 status of the assignment. The same client should also handle the tax and National Insurance deductions, unless an agency or umbrella company is involved.

Together – Proactive – Impactful

Our Service

Our IR35 service caters to contractors, agencies and end clients alike. We cover the entire hiring chain and can help you with:

  • Determining whether the ‘small business exemption’ applies

  • Identifying off-payroll workers

  • Reviewing contracts and working practices

  • Supporting dispute processes

  • Payroll and accounting

  • Dealing with HMRC on your behalf

Contractors are also offered a comprehensive tax and compliance service that covers all their accounting, corporation tax, self assessment, VAT and IR35 needs.

Together – Proactive – Impactful

Why Choose Us?

Fixed fees

Affordable fixed fees agreed upfront with no hidden charges or surprises. We also offer flexible payment options to make things even easier.

No jargon

Just polite and clear communication in plain English, all the time. No misunderstandings. No confusion.

Expertise

We’re experienced, qualified chartered accountants. You can trust our advice to keep your tax bill down, ensure full compliance, and help drive better business performance.

Proactive

We’re a helpful bunch, providing everyday support and are always ready to quickly respond to your queries. We keep in touch, keep you informed and keep you nagged about upcoming deadlines!

Partnering

Getting to know your business inside out and building a collaborative relationship are key to getting the most from our service. We’ll meet you regularly throughout the year (not just at the start and end) and keep in touch in between.

Personalised service

All our services are shaped around your specific needs, preferences and budget. This ensures you receive the best value, the best advice and the best outcomes.

Call us today on 0203 576 6000 or send an email

Together – Proactive – Impactful

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