Self-employed alert: How freelancers & contractors may be able to avoid IR35 tax changes

self employed alert how freelancers contractors may be able to avoid ir35 tax changes

Sumary of Self-employed alert: How freelancers & contractors may be able to avoid IR35 tax changes:

  • IR35 tax changes were introduced on April 6 and going forward, companies will be required to treat off-payroll workers as full-time employees, mirroring a system that has been in place in the public sector since 2017..
  • “In short, IR35 is an anti-avoidance tax legislation designed to close a loophole in the tax system where workers could exploit the setup of a limited company structure to avoid paying employment taxes..
  • “Essentially, it was brought in to ensure contractors doing work for companies are paying the same level of Income Tax and National Insurance Contributions as normal employees, and the firms that hire them are also paying additional tax contributions to HMRC..
  • “Whereas from 2017, IR35 applied predominantly to contractors in the public sector, the changes that have come into effect this week have extended these rules to the private sector, affecting an estimated 170,000 additional contractors..
  • While many experts and industries within the field worried about the new rules, Dan went on to confirm that many self-employed workers may not even be hit by them:.
  • “So, whether you are self-employed or a business owner, it vital you take time to understand the new IR35 rules and exactly who is affected by them because the chances are, you may not be..
  • “In general, if you, as self-employed, carry out work for a fixed fee, are paid at the end of a project, generally work for a number of different clients, and have control over how, when and where you work, the new IR35 changes may not apply to you..
  • “The best way to find out is via the HMRC website, and its CEST tool, which assesses whether you should be classed as ‘employed’ or ‘self-employed.’ DON’T MISS:State pension will increase but concern the sum ‘doesn’t meet’ needs [INSIGHT]Self-employed to be hit at ‘worst possible time’ as tax rules change [WARNING]’IR35 is becoming a storm in a teacup’ contractors income to be hit [EXPERT] “If you are still uncertain about whether or not your employment status is deemed to fall within IR35, you may not have to worry about non-compliance and hefty fines just yet, as HMRC have said they will implement a ‘light touch’ approach during the first year of roll-out, meaning that no penalties will be placed on anyone with inaccuracies relating to the IR35 rules..
  • “Make sure you use this time to properly get your head round these new tax changes, and whether or not they affect you.”.
  • Additionally, self-employed workers and contractors who work for relatively small firms are unlikely to be affected as Joanne Harris, a Technical Commercial Manager at SJD Accountancy, explained:.
  • “The biggest change for medium-large businesses is that the responsibility for determining the IR35 status of any contractor working for the company now sits with them…

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