IR35 is a set of rules that determine whether contractors are employees for tax purposes. If a contractor is deemed to be an employee, they will be subject to income tax and National Insurance contributions in the same way as an employee. This can have a significant impact on the contractor’s finances, so it is important to understand the IR35 rules and how they apply to your situation.
In order to comply with the IR35 rules, contractors must provide a status determination statement (SDS) to their clients. This statement sets out the contractor’s view on their employment status for tax purposes. The SDS must be based on a reasonable assessment of the facts and circumstances of the contract, and it must be provided to the client before any work is carried out.
There are a number of different factors that can affect a contractor’s IR35 status, including the level of control that the client has over the contractor’s work, the degree of financial risk that the contractor takes on, and the level of integration between the contractor and the client’s business. If you are unsure whether or not you are caught by IR35, you should seek professional advice.
Factors to Consider When Determining IR35 Status
There are a number of factors that HMRC will consider when determining whether or not a contractor is caught by IR35. These factors include:
- The level of control that the client has over the contractor’s work
- The degree of financial risk that the contractor takes on
- The level of integration between the contractor and the client’s business
- The nature of the contract
- The contractor’s previous employment history
If you are unsure whether or not you are caught by IR35, you should seek professional advice.
How to Get an IR35 Status Determination Statement
There are a number of different ways to get an IR35 status determination statement (SDS). You can get an SDS from:
- HMRC
- An accountant
- A payroll provider
The cost of an SDS will vary depending on the provider. However, it is important to remember that an SDS is a valuable document that can help you to avoid costly tax penalties. If you are unsure whether or not you are caught by IR35, you should seek professional advice.
Conclusion
IR35 is a complex set of rules that can have a significant impact on the finances of contractors. It is important to understand the IR35 rules and how they apply to your situation. If you are unsure whether or not you are caught by IR35, you should seek professional advice.
An IR35 status determination statement (SDS) is a valuable document that can help you to avoid costly tax penalties. If you are a contractor, you should get an SDS before you start work on any contract.
