IR35 Review

Last Updated December 2015

Government will review IR35 during the 2016/2017 tax year, with any changes not likely to come in until April 2017.

This was welcome news from the industry as many feared that some of HMRC's suggested changes, such as using the SDC test as the sole indicator for IR35, would be introduced in April 2016.  It seems that HMRC have listened to some of the concerns surrounding their suggested changes and for now at least, have held off from making changes.

We are aware that HMRC are currently reviewing its Employment Status Indicator Tool (ESI) with a view to making this a more prominent measure and to give more clarity. There are indications that this ESI tool may form part of the reform of IR35.

Need assistance with your particular circumstances?

For help understanding how IR35 impacts you, please contact one of the team on +44(0) 208 735 6370

IR35

IR35 is tax legislation introduced in April 2000 designed to tax "disguised employment" at a rate similar to employment.

Where a Limited Company provides the services of it's worker to an End Hirer (or recruitment agency) and the terms are such that without the Limited Company the worker would be an employee of the End Hirer, then HMRC would consider this “disguised employment”, and as such Dividend and other payments made from the Limited Company would be subject to IR35 tax treatment.

For freelance professionals and contractors understanding your IR35 status is an important aspect of operating under a Limited Company.