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IR35 - Medium to High Risk

If you are in either the ‘high risk’ band or the ‘medium risk’ band, there is a risk that HMRC will check whether IR35 applies to you. And this risk is not low.

So you need to decide whether IR35 applies to any of your engagements – especially if you are in the ‘high risk’ band. Suppose IR35 applies to you. Then IR35 may treat your intermediary as if it had made a payment triggering PAYE and NIC – that is, your intermediary may have to account for actual PAYE and NIC on a deemed payment.

Your intermediary can reduce this deemed payment if it pays employment income under PAYE and NIC before the end of the tax year (5 April). If it accounts for enough PAYE and NIC under the normal rules, it will reduce the deemed payment to nil.

If the deemed payment is not reduced to nil, then your intermediary will have to account for actual PAYE and NIC on a deemed payment.

So, if you want to reduce the deemed payment to nil, you need to work out how much employment income your intermediary needs to pay under the normal PAYE and NIC rules.

This means you need to know:

  • the IR35 income for the tax year
  • the allowable deductions for IR35 purposes.

For IR35 purposes, you work out the income on a cash received basis and the allowable deductions on a cash paid basis – not an accruals basis.

And employment income paid under PAYE and NIC will only reduce the deemed payment if it is paid before the end of the tax year. So, you need to arrange this before it is too late.

If HMRC check whether IR35 applies to you, and you have decided that it does not, you will have to tell them why you think it does not!

So based on my IR35 Business Entity Test results which option is the best for me? Going with an Umbrella Company or going with my own limited company? Find out more.

Why Choose ContractorUmbrella?

ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration - be ready to work in 24 hours, simply register online and we’ll take care of the rest.
  • Calculate your take home pay - use our online calculator to find out how much you could be taking home through ContractorUmbrella.
  • Same day payments - we offer same day payments as standard, for no additional fee.
  • Our Commitment Charter- is our guarantee that you will be looked after at every step of the way.
  • Flexible Limited Company Accountancy - when you sign up to our sister company Dolan Accountancy, you can transfer to ContractorUmbrella when umbrella employment better suits or your assignment sits inside IR35.
  • Employee Benefits - at ContractorUmbrella there are many benefits available to you as our employee including our Employee Rewards Scheme, Group Pension Scheme, Foreign Currency Exchange, Contractor Accommodation, Contractor Mortgages and much more.
  • Personal Employee Liaison Officer - we believe in the personal touch, so you will have your very own dedicated Employee Liaison Officer during your employment with us. Read some of the glowing testimonials we've received about our lovely staff and the outstanding commitment they give to all our employees and clients.

If you’d like to find out more, call us on 01206 591 000 or request a call back by completing our online form.