What is IR35?

IR35 is legislation introduced by HMRC in April 2000.

It is designed to stop workers fraudulently claiming to be contractors (as opposed to employees) for tax benefits. The legislation’s main aim is to target individuals who work via their own limited companies, while still performing the same work (under the same conditions) as normal employees. This can lead to less income tax and national insurance being paid.

From April 2020, IR35’s grasp will be widened and as such will result in these limited companies being caught by IR35 and hence an increased Tax and National Insurance charge will accrue. This will mean that contractors caught by IR35 will lose the tax benefits of working via limited companies. This prevents contractor companies from retaining profits to grow their business in the future.

To see if you are categorised as ‘self-employed’ under HMRC’s terms click here.

How can we help you?

Bailey Group Chartered Accountants have introduced a solution to combat HMRC’s IR35 legislation for the self-employed.

We have introduced the Bailey Group Umbrella company.

Bailey Group Umbrella Company will state that all Contractors are Shareholders and employees of the Umbrella company.

Therefore, as you are working through the Umbrella company (along with other none connected contractors) you will be paid a minimum amount as an employee, and you will only pay Income Tax and National Insurance contributions on your small amount of income.

This is done to ensure you keep your state pension maximised. There will be no auto enrolment pension unless you specifically ask for it.

All invoicing to your customers will be done through the Umbrella Company (plus VAT).

We will then pay you in 2 ways;

  1. Part salary (as above);
  2. Part dividend to your company (Dividends between UK companies are tax free).

This method maximises your income as you will only pay Personal Tax on the amount you draw from your own company as dividends or salary, whichever is best for you from a Personal Tax perspective.

You are eligible for this if:

  • Your company is VAT registered
  • Your company has its own insurance
  • You are the director of your company

If you would like to find out more on how we can help you or if you would like a personalised quote, click here to contact us now or complete the enquiry form above.