You may have come across the IR35 in the press or heard the recent hype in the UK about it. So, here’s what the IR35 means in a nutshell…
What is IR35?
‘IR35 is a word used to describe two sets of tax legislation that are designed to combat tax avoidance by workers, and the firms hiring them, who are supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.’ –contractor calculator.
So why is the latter being scrapped?
Calculating your tax
- If you don’t draw dividends and only pay yourself a salary – there would be no implications (same as umbrella co.)
- Depends on the type of contract from your client
- Taking into account pension, expenses, money being paid back into the ltd co and amount of dividends if any