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IR 35

IR35 is a new law that allows HMRC to collect additional taxes if they consider that a contractor could be, in fact, a “disguised employee”.

The purpose of IR35 is basically to make companies pay the right amount of Income Tax and National Insurance (for example, the NI that self-employed contractors pay is lower than the rate employees pay).

Some of the main things that HMRC looks at, if you’re a contractor:

  • do you have to do the work personally, or can they send someone else instead?
  • do you have to carry out any task that an employee would normally do (like managing other employees)?
  • does your client get to decide how, when, and where you do the work?

If the answer is “yes” to any of these, you might just be a disguised employee – at least according to the HMRC. HMRC might make your client place you into their payroll and will tax them Income Tax and NI at employee rates.

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