Advice for contractors
IR35 - advice for contractors
Before reading on, it's important to know that working for The Sanzar Partnership means that whatever your contract status, the IR35 regulations below will not impact you, as The Sanzar Partnership conforms to all HMRC legislation.
Our Tax efficient solution, which guarantees you a minimum return of 85% of your gross contract value, conforms entirely to the IR35 legislation as described below.
Background to IR35
IR35 was announced in the March 1999 Budget and became effective from 6 April 2000.
The legislation was designed to deal with "disguised employees" - individuals whom the government believed were taking advantage of a corporate structure, when they should have been taxed as any other employee.
The intention of the legislation is that, apart from specified deductions (some expenses), all money received by the contractor should be treated as paid to the individual in a form subject to Schedule E and class 1 NIC - in effect dividend payments and many business expenses are not allowed.
Where a contract is deemed falling within the IR35 criteria, then (after certain expenses) the excess will be deemed to be salary subject to PAYE and NI in the tax year to 5 April. Failure to correctly account for PAYE and NI could result in significant penalties and interest.
For the individual, a choice is necessary:
If IR35 does not apply to your situation, you could pay yourself through a limited company (PSC) using salary and dividends. This could mean that as a Company Director, you could result in you receiving approx. 74% of your Gross Contract Value.
If IR35 does apply to your contracted situation, the income generated by the contractor will be subject to National Insurance and PAYE tax and the income you will earn will be a lot less. This means that using a UK based Umbrella Solution is likely. You'd have to pay Tax and NI on your Gross Contract Value resulting in you receiving approx. 64%
However, there is a third option - joining The Sanzar Partnership
We employ you directly and enter into a contract to supply your services to your end client. This renders IR35 not applicable.
You will NOT have to worry about:
- Is my contract IR35 friendly or not?
- Can I find an Umbrella company that pays me more than 64%?
- Do I want the hassle and worry of running my own limited company (if I'm legally allowed to?)
- Will I be investigated by HMRC regarding my contract status?
Join The Sanzar Partnership; don't worry any longer about IR35 and take home 85% minimum of your gross contract value.
Don't just take our word for it...
If you're undecided about joining us, perhaps you'd like to talk to one of our existing employees about our services? We'd be happy to arrange this for you - call us on 01624 816 816 or send us a request.