Since the infamous 1999 Inland Revenue press release #35, IR35 has caused much concern. Workers who trade through a personal service company need their accountant to understand and manage IR35, to minimise their tax liabilities.
A tax saving of, typically, around £10k pa can be secured if your affairs can be structured to fall outside of IR35. This arises through extracting profits in the most tax efficient manner (small salary + balance as dividends, including to spouse), rather than the high salary structure required if ‘caught’ by IR35.
Appoint us as your IR35 accountants and we will help you self-assess your current IR35 risk exposure (via example IR35 checklist). We will then help you decide which of the following options is best advice for you:
If it appears IR35 does apply:
Accept that IR35 cannot be avoided, and:
- Comply with the prescriptive requirements of paying a high actual or ‘deemed’ salary through your own personal service company (Deemed Payment HMRC calculation tool).
- Cease trading through your own personal service company and transfer onto the payroll of an umbrella company,
- Cease trading through your own personal service company and transfer onto the payroll of your ultimate client (if this option is on offer).
Amend your documented contractual terms and work practices to ensure you fall outside of IR35,
If it appears IR35 does not apply, optimize your remuneration structure and:
Continually improve documented contractual terms and work practices to evidence and strengthen your opinion that IR35 does not apply.
Similarly, if-off payroll working rules result in your client imposing IR35 tax & NIC deductions on your company income (wef 1-Apr-17 in public sector and 1-Apr-21 in private sector) which can advise you of your options.
Get in touch with your local office and speak to one of our specialist tax advisers, to see how we can minimise your tax leakage and add value to your business.
We offer a free initial consultation to potential new clients.
As an engineering manager, I started my own consultancy business ten years ago, with my wife as co-director. Whitings guided us in setting up the day to day accounting systems, which even the smallest company has to have, and have since looked after the annual accounts and tax matters. This, combined with the help that they have given with our personal tax affairs, has allowed us to concentrate on the marketing and technical sides of our business, and undoubtedly saved us money. We find them professional, practical and accessible.