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IR35 Compliant
Both Expat Advantage and Payroll Umbrella are IR35 compliant umbrella company solutions, meaning you never have to worry about the prospect of an IR35 investigation. In fact the only thing you have to worry about is sending in your timesheets and expense claims on time, we do the rest!We guarantee both of our Umbrella Company solutions are IR35 compliant as all contract income (with the exception of expenses) is paid through the Pay as You Earn Scheme (PAYE). At no point do you receive anything that would constitute a profit payment. All salaried Income is subject to Income Tax and Class 1 National Insurance deductions and we give you regular payslips to prove it.
To find out more about our IR35 umbrella company solutions call Commonwealth Contractors now on 0800 294 4388 and speak to an experienced Account Manager!
What is IR35?
IR35 is a piece of legislation, which came into force in April 2000, that allows the HM Revenue and Customs to tax a freelance contractor as if he or she is the employee of the client to which contract services are being delivered.Before the introduction of IR35 (otherwise known as Intermediaries Legislation) any freelance contractor could avoid paying large amounts of Class 1 National Insurance by setting up a Limited Company and taking contract income in the form of dividends, which are not subject to National Insurance deductions. It did not matter what job was being undertaken or what contract services were being delivered, any freelance contractor could set up a Limited Company and avoid National Insurance Contributions. IR35 was introduced to close this loop and force freelance contractors that acting as ‘disguised employees’ of the client to pay employed levels of tax and national insurance on contract income. IR35 restricted saving National Insurance through dividends to those who were genuine high-level service providers, as opposed to disguised employees,
How do I know if I’m Inside IR35?
Determining whether or not you’re Inside IR35 is not a straightforward issue as it depends on the terms and conditions of the contract combined with the actual day to day working arrangements. Some questions that should be asked when evaluating IR35 status include:- Do you work for one Client or several Clients at the same time?
- Does a manager give you work and tell you what to do?
- Can you send someone else to the contract site to undertake work if you’re sick?
- Does your contract state what time you should start and end work each day?
- Do you attend staff events such as team building exercises, functions etc?
- Do you incur commercial risk?
- Does your company have a genuine existence beyond being a vehicle for your contract income; do you have a website, business cards, etc?
Unless you are 100% sure of your IR35 status you are usually best to use an umbrella company solution such as Expat Advantage or Payroll Umbrella. The consequences of being considered a ‘disguised employee’ Inside IR35 could be potentially significant, and HMRC can look back 6+ years. Given the significant added hassles of running your own Limited Company, it seldom makes sense unless you can clearly qualify for the benefits that come from being outside IR35. To find out more about our IR35 compliant umbrella company solutions call us now on 0800 294 4388 or submit your details and we will get right back to you.
What happens if I’m Inside IR35?
If you’re Inside IR35 you must pay employed levels of income tax and national insurance on contract income. For many freelance contractors the choice of contract solution is between an Umbrella Company or Limited Company. Only those freelance contractors consistently outside IR35 should usually consider a Limited Company.Where a freelance contractor running a limited company takes a contract Inside IR35 they must pay 95% of contract income through the PAYE scheme (the other 5% can go tax free to running costs). This removes the main benefit of a Limited Company i.e. National Insurance savings. The problem for limited company contractors Inside IR35 is that they still have all of the additional business administration duties (VAT Returns, PAYE Payments, Annual Accounts, Annual Returns etc) without any of the benefits of being outside IR35. If you are in this situation it is strongly advised that you use an IR35 umbrella company solution. To find out more about Expat Advantage or Payroll Umbrella call Commonwealth Contractors now on 0800 294 4388.
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