If we were to ask you what a Disguised Employee looks like within the organisations you work with, would you know? Are you the disguised employee? According to the UK’s HMRC, a Disguised Employee is someone who works within a business as if they were a permanent employee, but they do not pay the necessary corresponding National Insurance Contribution and Income Tax that a permanent employee would.
The IR35 is also known as the “Intermediaries Legislation”. HMRC refer to it as “a set of rules that affect your tax and National Insurance if you’re contracted to work for a client through an intermediary. An Intermediary could be your own limited company, a service or personal service company or a partnership. This means that you may need to follow IR35 if you work for a client through any of the above intermediaries”.
If you do work through an intermediary, then that intermediary needs to operate the necessary PAYE and National Insurance Contributions on any salary or wages it pays you during the tax year.
There are a few additional areas where the IR35 legislation may also apply, which could include
- If you’re working through an intermediary and either your intermediary or client are abroad
- If you work within the construction industry
- If you are an office-holder
- If you work with your partner or spouse
- If you are working through an intermediary, for a charitable organisation
The IR35 does not, however, apply if you work for a client through a Managed Service Company or agency.
The IR35 legislation changes come into effect in April 2017 and to ensure that you are prepared for the changes it brings to your own bottom-line, then be sure to join us at our next live broadcast where industry specialist Andrew Chamberlain, Deputy Director of Policy and External Affairs with IPSE (The Association of Independent Professionals and the Self Employed) will be discussing the IR35 in more detail and providing tips on how you can ready yourself for any changes it may bring.
About the AuthorMore Content by Katy Roberts