IR35 is the tax legislation controls workers and employers who would otherwise be classed as employees and an employer.
IR35 covers those who are not working as part of a company’s payroll, but who work via an intermediary such as a limited company. IR35 is also described by terms such as ‘disguised employment,’ or ‘off-payroll’ working,’ all denote workers who are not paid through the hirer company’s own PAYE method.
IR35 is UK legislation to confirm that tax is paid by workers who provide their services to clients or companies through an intermediary (via an umbrella or a limited company) who would otherwise be considered a member of staff sans the intermediary.
These kind of, off-payroll workers are paid through their own intermediary, the way in which they pay National Insurance contributions (NICs) and Income Tax works in a distinct approach to how it would if they were employed directly by the client.
IR35 Rules and Legislation are often pertinent to Gig Economy workers, contractors and freelance workers, all of whom are accountable for their own tax returns, NICs and expenses.
For these workers, the worker may eventually become fully employed by the employer, whilst there are many other cases in which the service provider or contractor can avail of umbrella company services to remain IR35 compliant, keeping the worker off the payroll.
What is IR35 Legislation?
IR35 was implemented by the UK government in 2000 and is used to recognize ‘disguised employees’ and tax them in accordance with the rate at which they should be paying tax, were they directly employed by their client with reference to Income Tax and National Insurance.
Prior to the implementation of IR35, self-employed workers were able to provide their services as a limited company, and take a significant huge percentage of their earnings, claimed as dividends. Hence, employees were able to save on NICs and other tax obligations and there was no regulation for HMRC to change or challenge the association so people could minimise their tax almost unrestricted.
How does Oasis Umbrella Company help?
We safeguard workers, agencies and hiring end clients in several easy yet very significant ways:
Tax Assurance and Efficiency – We provide tax surety to all parties that no tax avoidance is taking place. We also enable participants to view taxes as they are paid, in real time.
Added Protection – All workers are engaged using an employment contract, meaning that individuals can never be categorised as disguised or hidden employees of the client (hirer.)
Clearer Obligations – As employer, we assist in the collection and reporting of employee and employer taxes and contributions, as well as addressing other obligations.
Who Needs to Be Aware of IR35 Rules?
Be aware of off-payroll working rules and the rules of IR35, it includes you if:
You are the person responsible for hiring workers [i.e. a recruitment agency] who subsequently provide their services via an intermediary to clients in the public sector
The service you provide to a client is through your own intermediary
The work and employment you have is conducted via a partnership, another individual or a personal service company.
To find out more about our umbrella company services, how we can help workers and recruiters stay IR35 compliant and save time and money, get in touch.