IR35 Summed Up in less than 250 Words

ByThe Transport Intel Insider

IR35 Summed Up in less than 250 Words

The clock is counting down as the HMRC closes the net on the many thousands of self-employed workers facing higher tax bills after April 6th.

IR35 has been around since 1999, but changes in legistlation closes the tax loopholes of individuals, their clients and umbrella companies if implicated.

In that guise, individuals could decide whether they fell under IR35. In 2017, public companies had to decide,  come April 6th, it is the time for private contractors/umbrella companies to decide.

Changes are expected to bring in £3.1 billion of additional tax revenues over the next 4 years alone.

The transport sector expect agency labour payroll costs to rise by 25% and temporary drivers costs will increase to clients by 20%.

Businesses that meet at least two of the following criteria are unaffected by the changes: –

  • Turnover of less than £10.2m a year
  • Balance sheet assets of less than £51m.
  • Companies with fewer than 50 employees

For contractors doing work with these smaller companies, the rules remain the same – it is up to the individual to decide whether they fall under IR35.

Sole Traders are unaffected by the upcoming changes as sole traders are exempt from IR35 legislation.

“However, if your working hours are decided by someone else and you can be told what tasks you’re working on, where you’ll be working, and how you should work, then you may well fall under the ‘disguised employee’ banner, and therefore could be seen as being inside IR35.”

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