What IR35 means for you as a Contractor or Freelancer

22 June 2018

IR35 was HMRC's response to the growing number of employees leaving their permanent roles, setting up their own businesses and then returning to perform their old role as a contractor to avoid paying Tax and National Insurance at the higher rates.

While there is nothing wrong with operating within IR35, many contractors and freelancers would prefer to work exclusively outside of IR35 and be a true self-employed entity.

As a contractor or freelancer it is important that you understand your personal risk of being defined as a 'disguised employee' and determine your IR35 status to ensure that you are paying the correct amount of Tax and National Insurance.  Your IR35 status can vary from contract to contract.

HMRC have developed a tool called CEST to help you check your employment status for tax and can help you understand how HMRC assesses if an assignment is inside or outside of IR35.

You can read our guide Understanding IR35 for some further details or give us a call to discuss your IR35 status further.