Latest News
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31st January 2012
Demand for IT Contractors Set to Soar in the G20 Countries -
27th January 2012
Demand for PAYE Umbrella Contractors Stayed Strong in January, REC JobsOutlook Reveals -
26th January 2012
Contractors May be Required to Obtain Compulsory HSE Passports -
25th January 2012
Scottish PAYE Umbrella Contractors are in Demand - More Atlantic News
IR35 - Details You Should Know
It seems that with the proposed MSC legislation
looming, there has been has been a resurged interest by contractors in forming
their own Limited Company.
Please be aware though that whilst the proposed legislation will almost certainly
spell the end of Composites Companies,
IR35 will certainly still be in place
to regulate the employment status and therefore the tax efficiency of
those that choose PSC's.
Come April 2007, Composite Companies and other MSC's will be wiped out, leaving contractors with the option of using:
Unfortunately the PSC option is further jaded by the Intermediaries legislation known as IR35.
The legislation is designed to increase the Tax and NIC Earnings from contractors
who operate their own PSC.
In the old days, many freelancers' had discovered that it was more tax efficient to distribute the majority of
income as dividends, rather than by salary.
- Umbrella Companies,
- Agencies, or
- Personal Service Companies (PSC's)
Put another way, up until April 2000 many contractors used the 'wrapper' of incorporation as a way to gain the
various beneficial Tax and National Insurance arrangements that were legitimately open to those working through
their own Limited Company.
In a nutshell the IR35 rules sought to re-dress this "dividend remuneration discovery" by
making the decision whether to work through a service company or as a direct employee
broadly neutral in terms of the Tax and NIC's which is payable.
