IR35 was introduced by the UK Government in April 2000. Its aim is to stop disguised employment. In other words, bring the level of tax on people working through personal service companies in line with the tax on the earnings of payroll staff.

In its most simplified form if you work for one company as your only contract, then the Inland Revenue considers you to be employed not self-employed and you are liable to pay the extra tax.

Prior to IR35, the Inland Revenue accepted that if you worked through a limited company then you were not employed by your client. This meant you could avoid PAYE tax and reduce your NI contributions. In effect, you could leave your full-time job with a company and return the next day to do the same job as a freelance consultant for a considerable increase in take home pay.

IR35 puts an end to much of that. In fact, it is estimated that 80% of IT contractors are affected by the new rules and fail the ‘IR35 test’. This is an Inland Revenue measure which determines under what category contractors fall under - whether you are a genuine contractor or “akin to employed”.

To find out if you pass the IR35 test, answer 11 simple questions or visit www.inlandrevenue.gov.uk and go to leaflet IR56 “Employed or self-employed. A guide for tax and national insurance” or contact us now and we provide FREE independent assessment of your situation.

If you find that, like so many other contractors, passing this test is a major problem, there is another way of reducing your tax bill and maximising your income – by joining IFL Management now!