The so called “IR35” legislation was originally enacted in Schedule 12 of the Finance Act 2000 (which deals with tax) and the Social Security Contributions (Intermediaries) Regulations 2000 (which deals with National Insurance). IR35 is the name of the press release issued by the Inland Revenue announcing the impending legislation in April 1999 and the name has been adopted as a generic name for the legislation ever since.


The principles are that where an individual is providing services to a client for the purposes of the business of the client and the contract arrangements are through a third party (the intermediary), the intermediary, which is usually the personal service company of the individual, is liable to pay the tax if the arrangements would amount to employment for tax purposes had the arrangements been direct between the individual and the client.


In simple terms IR35 is the system that determines if you are eligible to process your earnings through a limited company. The legislation means that the Revenue can tax some contractors as though they are employees of their clients. Contractors caught by IR35 pay significantly more tax reducing their take home pay by up to 25%.

To get an indication of your IR35 status please click here .

To see IR35 Frequently Asked Questions please click here .

If you would like more information on IR35 please visit these pages:

www.inlandrevenue.gov.uk
www.contractorcalculator.co.uk
www.contractoruk.com
www.contracteye.co.uk
www.shout99.com