An introduction to IR35

At PayStream we are committed to providing a fast, reliable and efficient service which provides our contractors with the best take home pay in the most compliant way. Our in-house expert legal and compliance team ensures that our contractors receive the very best advice on current legislation and can react quickly to changes in legislation which affects you as a contractor, such as IR35.

Having our own in-house legal and compliance team is also the reason why we are able to offer our limited company contractors free unlimited IR35 reviews which are available whilst you are a PayStream contractor.

For a limited time only we are going to offer ALL Advantage contractors a free IR35 review regardless of whether they are currently using a PayStream service or not.

Here we answer some of your frequently asked IR35 questions but if you have any questions which haven't been covered on this page then please contact our Compliance Team using the form opposite.

What is IR35?

'IR35' is the name commonly used to refer to a piece of tax legislation which came into force in July 2000. It was introduced with the aim of preventing the avoidance of tax.

Does IR35 apply to me?

IR35 is relevant to workers who supply their services through private limited companies or partnerships and pay themselves dividends. If you run your own business as a registered limited company or partnership, IR35 is applicable to you and you need to consider the implications of this, starting with working out whether you are 'inside' or 'outside' the legislation.

IR35 has also been extended to 'office-holders' for tax purposes. As from 6th April 2013, where a worker provides their personal services to a client via an intermediary to fulfil the duties of an office, the income from those services must also be subject to PAYE/NICs as employment income. Simply put, limited company contractors will not be able to operate outside the scope of the IR35 legislation when acting as an office-holder for their client.

You do not need to worry about IR35 if:

  • You pay employed levels of PAYE and National Insurance Contributions (NICs) whether as an employee (including umbrella company arrangements) or as an agency worker being paid directly by the agency on PAYE.
  • You are self-employed as a sole trader, i.e. working as an individual with full liability for any debts you may incur. Please note that in these circumstances, you will need to consider whether you are genuinely self-employed. You can view more information here

What does it mean to be 'inside' or 'outside' IR35

If you are inside IR35, you should be paying employed levels of tax. If you are outside IR35, you may choose to pay yourself using a combination of salary and dividends. Whether or not you are inside the legislation is the most pressing question.

Unfortunately, it is often the most difficult to answer. In essence, you are inside IR35 if you are effectively an employee of the place you work at (even if your contract explicitly describes you differently). You are outside IR35 if you are genuinely in business on your own account. But in practice, things are more complex than that and it is easy to get it wrong - sometimes with serious consequences.

Send your IR35 query to our Compliance Team

Please give details of your IR35 query:*
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