On April 1st, 2020, new IR35 regulations come into play and experts are saying that these new, stricter, regulations could have an impact on contractors both in the UK and UK workers contracting overseas.
The new IR35 regulations may make it more difficult for contractors both in the UK and UK workers contracting overseas to work through limited companies by closing down the tax efficiencies. With IR35, contractors may have to pay PAYE and NI (National Insurance) in the future.
What Is IR35?
According to HMRC, IR35 is “tax legislation designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.” These contractors both in the UK and UK workers contracting overseas may be seen as ‘disguised employees’ by Her Majesty’s Revenue and Customs and IR35 is a way for the government to crack down on this practice.
What does this mean? It means that, public sector business owners who supply their services through a personal services company (“PSC”), will no longer be protected by limited liability, and they won’t be able to save on their tax bill by paying dividends instead of a salary. HMRC introduced IR35 to stop the “perceived loss of tax through public sector PSC’s.”
The result of the new IR35 regulations is that contractors both in the UK and UK workers contracting overseas who are currently operating through their own limited company, may have to take up assignments as Temporary Agency Workers, making them subject to PAYE deductions.
What Can You Do?
If you are concerned about the impact that IR35 will have on you, Binks Overseas can help. Our Umbrella Company service employs the contractor, but enables them to make deductions and offset expenses for tax purposes. This is much more efficient than PAYE and NI and it relieves a lot of the stress and anxiety associated with the new IR35 regulations.
Contact Binks Overseas
To learn more about IR35 and if it will have an impact on you, contact Binks Overseas today and speak with a payroll specialist who can answer any questions you might have about your company’s payroll needs.
If you enjoyed this article, please feel free to share it on your favourite social media sites.