IR35 – Off Payroll IR35 legislation relates to whether a contractor is a disguised employee or genuinely self-employed. If they are a disguised employee their remuneration should be taxed as salary (tax deducted at source); meaning they would pay more tax.
Unsurprisingly the vast majority of PSCs (Personal
Services Company's who operate as Limited Companies) state that they are outside of IR35 in order to continue to enjoy the tax advantages of this; and the government loses millions in tax revenue each year. From April 2021 the end user (e.g. the Company using the contractor), NOT the contractor, is responsible for making the IR35 decision (i.e., are they genuinely self-employed or a disguised employee). The logic being that it is the end user (the Company)...
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The new arrangements for IR35 from April 2021 will require companies to determine if personal services contractors (who operate under their own limited company) are genuinely self-employed or just disguised employees.
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