IR35 and how it affects you
IR35 affects all contractors who do not meet HMRC's definition of 'self employment'.
The IR35 rules will result in an increased tax and N.I. liability and will prevent contractor companies from retaining profits to grow their business in the future.
Those contractors who fall under the IR35 rules will be liable to Schedule E taxation and National Insurance (N.I.), following deductions for expenses. Income will be in the form of a 'deemed payment', following these deductions. Contractor Companies may have a mixture of IR35 and non-IR35 turnover, in which case income and reward associated with unregulated contracts will escape these rules.
The following expenses can therefore be claimed in addition to the 5% allowance:
Pension payments - either personal or executive schemes
Business travel - incurred in the course of business duties
Subsistence - accomodation, meals when away from home
Professional Indemnity cover
Benefits in kind - e.g. private medical insurance
The Implications on Businesses and Individuals
The result of the Brexit referendum, in which the UK decided to leave the EU, potentially has very significant economic implications for the country, in particular the UK tax system.
However, this is only the start, as the UK left the EU on 31st January 2020, so whilst there is now a period of uncertainty for businesses, there is also time for the UK to start taking necessary action.
We remain committed to partnering with our clients during this period of volatility and uncertainty, supporting them as the implications of the vote become clear and helping them work through any necessary changes
Contact us for more information on how we can help you.