So what exactly are the rules of IR35?
Intermediaries Legislation or as more often known - IR35 was introduced in 2000. The purpose & main objective of the government introducing IR35 was to cease employees from becoming company owners & disguised employees, whilst doing the exact same job with the same level of risk & control as an worker benefiting from all the tax advantages of a legitimate limited company owner.
Well they are simple, run a true & legitimate limited company whilst accepting all the financial risks & understand that you are the in control of your company & you ought to theoretically be ok. However, in case you work under total control & are under direct supervision, have a contract that fundamentally is an employment contract & fails to recognise any of the following, there is a lovely chance you'll be inside.
Substitution, control, financial risk, use of your own equipment (sometimes this cannot be helped), right of dismissal, worker benefits and a few other things (best to seek professional advice in case you are in any doubt).
However, it is not only important to have a contract that is outside IR35, it is vital that you work in the same way. There is no point having a contract this is outside but work inside IR35.
IR35 Rules - what in case you are inside?
However, despite all of the above every contractors situation is slightly different so it always makes sense to chat things over & get things checked by a specialist (but I am positive you knew that anyway).
In case you are inside/caught by IR35 is there any benefit in trading through a limited company? The answer is usually yes. You can still claim: travelling & accommodation expenses, 5% of your turnover and benefit from the Flat Rate VAT System - The flat rate VAT system is an incentive provided by the government to help simplify taxes & means contractors charge VAT to invoices at regardless of the prevailing rate is (2011 - 20%) & only pay back HMRC at a lower rate. For plenty of IT Contractors the flat rate VAT is 13.5% in year (the standard rate is 14.5% but companies get a 1% discount in their first year of trading) with whatever is left being counted as profit for the contractor. This additional profit can add up to thousands of pounds of additional profit, fundamentally free. As well as this, contractors will get interest on the money held within your own company (not much at the moment but when rates were at 5% it did make a difference).
Intermediaries Legislation or as more often known - IR35 was introduced in 2000. The purpose & main objective of the government introducing IR35 was to cease employees from becoming company owners & disguised employees, whilst doing the exact same job with the same level of risk & control as an worker benefiting from all the tax advantages of a legitimate limited company owner.
Well they are simple, run a true & legitimate limited company whilst accepting all the financial risks & understand that you are the in control of your company & you ought to theoretically be ok. However, in case you work under total control & are under direct supervision, have a contract that fundamentally is an employment contract & fails to recognise any of the following, there is a lovely chance you'll be inside.
Substitution, control, financial risk, use of your own equipment (sometimes this cannot be helped), right of dismissal, worker benefits and a few other things (best to seek professional advice in case you are in any doubt).
However, it is not only important to have a contract that is outside IR35, it is vital that you work in the same way. There is no point having a contract this is outside but work inside IR35.
IR35 Rules - what in case you are inside?
However, despite all of the above every contractors situation is slightly different so it always makes sense to chat things over & get things checked by a specialist (but I am positive you knew that anyway).
In case you are inside/caught by IR35 is there any benefit in trading through a limited company? The answer is usually yes. You can still claim: travelling & accommodation expenses, 5% of your turnover and benefit from the Flat Rate VAT System - The flat rate VAT system is an incentive provided by the government to help simplify taxes & means contractors charge VAT to invoices at regardless of the prevailing rate is (2011 - 20%) & only pay back HMRC at a lower rate. For plenty of IT Contractors the flat rate VAT is 13.5% in year (the standard rate is 14.5% but companies get a 1% discount in their first year of trading) with whatever is left being counted as profit for the contractor. This additional profit can add up to thousands of pounds of additional profit, fundamentally free. As well as this, contractors will get interest on the money held within your own company (not much at the moment but when rates were at 5% it did make a difference).
0 komentar:
Posting Komentar