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IR35: What contractors need to know

IR35: What contractors need to know

The IR35, the HMRC's name for off-payroll working and subsequent taxation, had significant changes due to come into force in April 2020. However, with the Coronavirus pandemic occurring, they chose to delay it until April 2021. If you're a contractor, it's important that you're fully aware of what IR35 changes mean for you.

1. IR35 legislation developments

Many contractors operate through their own limited company, as 'Personal Service Company' contractors. While historically, this group hasn't been classified as employees in terms of tax, HMRC wants to change this, believing contracted professionals (and other limited company contractors, such as those in IT) are what they've dubbed 'disguised employees'.

From April this year, IR35 changes involve how your employment status is established. While before, it was only the public sector - if your client - that could decide your employment status. Contractors with a private sector client had their intermediary responsible for this decision, which meant, if the intermediary was their own limited company, they could essentially choose whether they were 'inside' (employed) or 'outside' (self-employed) IR35. These were 'disguised employees' who were not paying the same National Insurance and tax rates as, unofficially, their colleagues.

2. What does this mean for you?

The two most important things that contractors who were previously outside IR35 need to be aware of is that your weekly pay will initially appear to reduce. This is down to National Insurance and additional taxation coming into force. Secondly, you need to be aware that HMRC considers most contractors to be employed, and therefore taxed as such. Consequently, it's likely that you'll be considered 'inside IR35'. It's important that you don't resort to using umbrella companies to avoid paying the appropriate tax, and instead, follow the guidance set out by these upcoming changes.

Speak to Taxcare Accountancy

If you're an IT professional, for example, and are concerned about IR35 changes affecting you, speak to a member of our experienced team of chartered accountants and advisors at Taxcare Accountancy today.

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Affordable Pay-monthly Packages

We offer a full range of services to limited companies, solo trader, partnership, charity, LLP, CIC as well as individuals. We have arranged our services into easy to choose packages that suit your needs.

Start-up
£ 60  / Month (+VAT)

This price plan is suitable for the start-up companies who are not VAT registered.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Payroll & RTI submission for 1 employee
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Assisting with correspondence from HMRC and Companies House
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 80K
Limited Company
£ 100  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered and turnover is less than 100K with a couple of employees.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 2 employees
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • MTD VAT returns submissions – quarterly
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 100K
Company Pro
£ 150  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered; turnovers are more than 100K and have 2 directors and shareholders.

  • Company formation (if required)
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 5 employees (Free)
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Unlimited face to face advice and email support
  • 2 Directors
  • 2 Shareholders
  • Annual turnover should be less than 200K
Company Premium
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This bespoke price plan is suitable for the companies who are VAT registered, with more directors, shareholders and employees. Also, annual turnover is more than 200k and requires further bespoke services.

  • Company formation
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission all employees
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for the all Directors (Free)*
  • Unlimited face to face advice and email support
  • Flexible and can be discussed
  • Annual turnover should be more than 200K

Add on Services

  1. Personal Tax Returns

    This price plan is suitable for self-employed individuals, landlords and those who need to submit Self-Assessment Tax Returns.

    If you need to submit the Self-Assessment Tax Return, we can offer you competitive prices starting from £150 + VAT. Price can vary according to your nature of income. Please contact us for more details.

  2. Tax Investigation
  3. Business Legal Support
  4. Company Formation
  5. Business Mentoring
  6. ARA accounting services for ATOL & ABTA travel companies

    Our commitment to you is that we’ll ensure all the information we’ve submitted to the Civil Aviation Authority is up-to-date and accurate. 

Taxcare Accountancy was formed to provide Small & Medium Businesses with an affordable, proactive and professional accountancy services…