Keep On Top Of IR35 Tax Laws
If a worker provides a service through an intermediary such as their own limited company, they might be expected to pay 25% more tax each year according to new IR35 laws.
As these laws, originally brought about in 2000, have been reformed it is important to understand what they could mean for you!
Seeking professional advice is important when it comes to new legislation that has a significant effect on the small businesses that it is targeted at. Brodies can offer unbeaten, expert advice on IR35 laws and many others with their trustworthy solicitors.
Firstly, you need to understand it. The aim of the reform is to ensure that all workers in similar roles in the same organisation pay the same tax, whether they are employees or contractors.
However, unfortunately many people have no idea what this means for them.
So does this affect you and if so, how?
Does it apply to you?
The most important question here is – does it apply to you?
In the eyes of HMRC, a company is deemed to be a ‘small business’ if annually they 1) DO NOT turn over any more than £10.2 million a year, 2) the balance sheet total is less than £5.1 million, and/or 3) it has less than 50 employees.
If 2 or more of the above requirements apply to you, then you are covered by the IR35 tax laws.
Simply, earning an income from 1 or 2 organisations on a sustained basis is enough to have you down as an employee.
So… what now?
Wondering how you’re now supposed to manage your contractor population with this new legislation?
Firstly, you should review hiring criteria, what your current arrangements are with your contractors and who they are. You should also do a risk assessment of what the new laws mean for you and your current contractor relationships.
Once you have made solid plans on changes to contracts with agencies and the hiring models, you should communicate this. Don’t leave your contractors in the dark and prepare for reactions in advance.
Lastly you should implement your planned changes and protect your company before it is too late to do so. Also ensure that payroll are notified about these changes.
Does this all sound a bit much? These new changes can be quite complex and difficult to understand. This is why it is imperative to seek legal advice if you are unsure about anything, to avoid feeling a great impact from the increased annual tax rates.
By seeking expert advice, you can be sure that your company is in safe hands and everything is being handled correctly. Consequently, you can relax and feel the weight lift off your shoulders – hand this over to a professional.
Get in touch with solicitors you can trust today!