IR35 Explained Briefly
IR35 tax rules were first introduced in 1999 to prevent individuals from paying less tax by supplying their services through an intermediary, such as a personal service company when their contract and the way they work in reality points to them being an employee. Reforms around IR35 were made in 2017 and 2021 and took away the decision making process from the contractor working and placed responsibility further up the service chain.
Inside or Outside?
If your contract and the way that you perform your services are deemed to be “inside IR35” then you are considered to be an employee of your end client and your choices will be focused on operating on payroll and subject to PAYE tax.
If your situation is deemed to be “outside IR35” then your contract and the way that you perform your assignment can be considered that you are working on your own account and you have more choices, including having your own limited company. Your agency will be able to give you an indication if the assignment is Inside or Outside IR35.
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