At first glance the rules seem to be quite straightforward. If you are working in an environment where anyone working around you would say to anyone asking, that you were an employee of the business and working for the business in the same way as other employees, then you are an employee and you should be paying the same taxes as an employee.
So it would be understandable to assume that it’s not so bad to come under the IR35 rules, that you’ll pay the tax and national insurance in the same way that an employee does and the business that’s hiring you would meet their own side of employment taxes i.e. the employers’ national insurance.
Unfortunately, that is not the case. Under IR35 your limited company pays the tax and national insurance normally applied to an employee and in addition the national insurance element that would be paid by the employer. The hiring business remains unaffected and is not responsible for the employer’s national insurance that they have to pay for employees.
This has given rise to separate legislation aimed at preventing businesses taking advantage of those that should be entitled to employees’ rights. This can be explored in more detail here Conduct regulations 2003.
Under IR35 the company turnover without VAT less: 5% of turnover; pension contributions; travel costs; and business insurances, is subjected to employment taxes as discussed above.
Why Integro Accounting?
Integro Accounting is the UK’s only specialist provider of fixed fee, limited company accountancy services for contractors, consultants and freelancers that was established to an award winning standard – our Practice Manager, Maria Williams, won The British Accountancy Awards’ ‘Accountant of the Year’ in 2011.
We were set up with the vision of providing a service that is the ultimate for the dynamic, busy professional of today in a language you understand.
Integro Accounting have designed a bespoke service for the contractor who is always on the go; never forgetting that one size will never fit all.
The relationship you have with your accountant is the most important factor in our service which is why we will always offer unlimited contact with your own personal accountant; whether that contact is via the phone, email or face to face.
We have our 3 offices located in London, the South-West and on the Bedfordshire and Buckinghamshire border. There are also meeting locations in many of the major cities and towns across the Home counties, South-West and South Wales, all conveniently placed so that you never have to travel far to meet your accountant.
If you have any questions about contracting or would like to find out more about how Integro Accounting can help you and business please call Christian on 01525 303984, email email@example.com or request a callback.