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IR35 Overview

IR35 refers to the Intermediaries legislation that was introduced on 6th April 2000.

The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise:

  • For tax purposes, be regarded as an employee of the client; and
  • For NICs purposes, be regarded as employed in employed earner’s employment by the client

If you use a PAYE umbrella scheme, all your revenue is taxed as though you are an employee, the same as if you were inside IR35.

All other contractors and freelancers need to consider IR35 and whether or not they are considered to be ‘inside IR35’.

Being ‘inside IR35’ depends on a number of factors. It is not entirely objective whether a contractor is classed as ‘inside IR35’ and depends on the terms and conditions in the contract, together with the contractors working arrangements.

For more information about whether or not IR35 applies to you please see IR35: Working through an Intermediary