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Contracts inside IR35 and outside IR35.

What are your options?

IR35 is a piece of tax legislation designed to target disguised employment. It uses a set of tests to find out if someone is genuinely in business on their own account or are working as a disguised employee of the client.

In this guide we'll answer some common contractor FAQs, so you know exactly what options you have available.

Contracts inside or outside IR35 - Contractor FAQs

The simple answer is yes. If you are currently working through your own limited company (PSC) you can continue to do so in the future, providing your end client has advised that your contract is outside IR35.

Yes but you’ll need to ensure that you pay the correct PAYE and NI. These are commonly referred to as ‘deemed’ payments and they can be managed through your PSC but it involves more complex accounting arrangements and is less efficient.

You can accept that assignment as an employee of your client or opt to use an umbrella company as your employer. You won’t need to close your limited company – you can operate a company and be an employee at the same time.

You should discuss this with your Agency, but an optimum solution is to maintain your PSC for your outside IR35 work and choose a reputable umbrella company to work through your inside IR35 contracts.

Choosing the right umbrella company gives you greater flexibility to handle short term assignments. Onboarding is quick and easy, you’ll get paid on time and be provided with payslips explaining how your pay and deductions have been calculated. All this and of course all your statutory rights as an employee.

No. Your limited company can become ‘dormant’ until you need it again. You will still need to file Annual statements and certain Tax Returns but your accounting fees for this work should be significantly reduced.

You should discuss this with your accountant. It may be beneficial to keep your company going and withdraw dividends over a period of time or close it and withdraw all the funds at once. A tax-efficient exit is usually possible, but you need to take advice tailored to your personal circumstances. PayStream’s Tax Advisory team can help with this review if required.

IR35 Comply: our contract review service

Our IR35 portal, which was named the UK's Best Contractor Innovation at The Contracting Awards 2020, makes completing an IR35 review quicker and easier. It also leaves an audit trail of the outcome and supporting documents, ready for you to refer back to later.

Start your IR35 review

Estimate your take home pay using our contractor calculator.

We'll break down the calculation based on your hourly or daily rate. You can even input any expenses you may have.

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