Simmers & Co
Topical Points Answer
Do you understand IR35?
IR35, effective since 2000, is a means to aid the taxation of contract workers, where the government felt that they were not paying the correct amount of tax. Broadly speaking, IR35 would cover contractors who operate as self employed but work for only one organisation. If you fall under IR35 you will be liable to pay Income Tax and National Insurance after deduction of business expenses. IR35 will only come into operation if you are deemed to be "employed" and you would be affected if you would have been given contracts of employment, had you worked directly for the organisation concerned, rather than operating through your own company or partnership.
If you feel you may be caught by these regulations, it would be a good idea to diversify your work. You should also seek professional advice from your accountant.
Most contractors who may be caught by this regulation are worried about being taxed as an employee but missing out on the perks of being self employed. This would affect paid holidays and benefits. As an employee their income would have included these benefits but the self employed rate paid to them will usually leave a shortfall. The best way to overcome this is to increase your self employed rate chargeable ( you will need in the region of 20% to compensate). Also, make sure that you are claiming all the expenses you can against your income.