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IR35
Overview

IR35, also known as the Intermediaries Legislation, is concerned with employment status (employed or self-employed) for tax and national insurance purposes.

At its most basic, it means that if a contractor provides their services to a third party (the client) through a limited company (an intermediary), then they have to consider IR35 for each and every contract they undertake. IR35 is concerned with the relationship of an individual with the end client.

To be inside IR35 means that this relationship is effectively one of 'disguised employment' and the contractor will have to pay employed levels of tax and NIC on their income. If the relationship is not 'disguised employment' and is outside IR35, the contractor is free to account for their own tax and NIC on their income through their own company.

The net result is that being inside IR35 usually costs a contractor a lot more!

 

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