IR35

IR35 is a tax law in the United Kingdom that was introduced to prevent tax avoidance by individuals who provide their services to clients through an intermediary, such as a limited company or a personal service company.

 

The law is designed to determine whether an individual should be considered an employee for tax purposes, even if they are not directly employed by the client.

If an individual is deemed to be an employee under IR35, they will have to pay taxes and National Insurance contributions that are similar to those paid by regular employees.

This means that they will not be able to take advantage of the tax benefits of working through an intermediary.

 

The determination of whether IR35 applies to a particular engagement is based on a set of factors, including the degree of control that the client has over the work that is performed, the level of financial risk that the individual takes on, and the level of integration of the individual's work with the client's business.

 

IR35 has been a contentious issue in the UK, with many individuals and businesses arguing that it is overly complex and difficult to apply in practice. However, it remains an important part of UK tax law and has implications for both individuals and businesses that engage off-payroll workers.