Understanding IR35

Are you sure about IR35 and its implications on IT Contractors in the London UK market? Read our quick guide or contact us for an appointment.

BE AWARE THAT THE HMRC BUSINESS ENTITY TEST HAS BEEN ABOLISHED HOWEVER THIS HAS NOT CHANGED HOW THE REVENUE VIEW IR35 AND IN THE CURRENT ECONOMIC ENVIRONMENT CONTRACTORS ARE LIKELY TO BE CHECKED AS TO WHETHER THEY FALL OUTSIDE OR INSIDE IR35 FOR EACH CONTRACT THEY TAKE. NEW LEGISLATION (APRIL 2017) HAS BEEN INTRODUCED BY HMRC TO ATTACK CONTRACTORS VIA IR35 IN THE PUBLIC SECTORFOR APRIL.THESE ARE LIKELY TO BE EXTENDED TO THE PRIVATE SECTOR IN 2018.

Unfortunately Most contracts in the public sector are being advertised or issued as caught inside IR35 this means that you are likely to have to work through an Umbrella company rather than a PSC as there will be no benefit in using a PSC.

In July 2000 the Law known as IR35 Directive radically affected the operation of contractors working through their own limited companies. Primarily aimed at IT and Engineering contractors it significantly reduced income by increasing the tax and NI being deducted with only limited opportunities to offset expenses.

What is IR35?

Simply, unless deemed to be outside of this Directive you pay full tax and national insurance on the majority of your income or earnings regardless of your employment status. Only 5% of the revenue earned may be retained within your company and the remainder must be paid to the contractor with Tax and NI being deducted (meaning they/ you are no better off that a permanent employee, maybe even worse off).

We offer some exciting opportunities for contractors to improve their position through managing and understanding their contracts, whatever their choice of contracting, by contracting with BITE. Our Contract Administration and compliancy services.

Post IR35 Contracting

If caught by IR35 your contract will not provide you the traditional benefits of operating through a limited company.

This could mean that your Ltd. Company becomes an unwelcome expense and that new contractors to the UK will not find it cost effective to operate through a personal Ltd. Company. At best you are likely to be worse off unless you take positive steps to improve your personal circumstances.

This means either contracting through a limited company or umbrella company which BITE can provide

Or:

Attempting to ensure that your contract, when contracting via a PSC, takes you outside IR35 and using a contract administration service such as BITE’s. Ensure you receive your money via credit control services and bad debt insurance.

See our article on Public sector contracting post April 2017

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More info on IR35

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However If you purchase one of our training modules separately, attend and are not satisfied with it we will refund your money.

BITE Consulting covers: IT Contracting London UK, IT Consulting London UK, IT Contract work London, IT contract Jobs London, Temporary IT work in London, Temporary IT Jobs in London, working with Freelance Interim Consultants for professional jobs.

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