What does IR35 mean for contractors?

IR35 is a piece of UK tax legislation designed to stop workers claiming to be contractors purely for tax benefits. Join us as we share industry insight into IR35, including what it means for contractors and latest updates. 

What does this mean for contractors? 

You need to make sure that you are IR35 compliant. If the HMRC finds that you have been working on a self-employed basis via a limited company (outside IR35) when the reality is the work you do for your client reflects employment (inside IR35), you will be required to pay back the missing tax plus interest and any penalties. 

Public sector

If you are a contractor in the public sector, you are not able to determine your IR35 status – it must be determined by the public sector body providing you with the assignment. 

Private sector

If you are a contractor in the private sector, changes to off-payroll legislation (IR35) came into effect from 6 April 2021. From 6 April 2021, your IR35 status must be determined by the private sector organisation you are working for. 

Latest updates? 

In September 2022, the government’s mini-budget set out plans to repeal IR35 reform, meaning that contractors would have been responsible for ensuring they pay the correct amount of tax and national insurance from 6 April 2023.

A few weeks later, the ex-chancellor’s successor, Jemery Hunt, made a breakneck U-turn on plans to scrap IR35 reform (and the majority of the mini-budget, for that matter).

So where are we now? 

After all of that uproar, IR35 reform is fixed in place and nothing is changing thus far. In other words, the end-client is still in charge of assessing whether the contractor belongs inside or outside IR35. 

The future of IR35 reform is still to be determined and we aim to keep you informed on any updates. 

What if I’m working through an umbrella company? 

Contractors working through a compliant umbrella company needn’t worry about IR35 because you technically count as a permanent employee and are therefore subject to PAYE. Your tax and National Insurance Contributions will be taken care of and you can rest assured that you’re compliant with UK tax law. To mitigate the risk of tax avoidance, make sure the umbrella company you choose is legitimate and accredited by either FCSA or Professional Passport. 

If you have any queries concerning IR35, contact us via email at [email protected] or call us on 02039676846. 

Mint is an accredited umbrella company so get why not get started and sign up with us today!