Legislation to clarify tax status
Question : I work in the construction industry and, although I work on big projects, I am a self employed worker. Will the new self employment legislation and affect me?
Jim Andrew from TaxAssist Accountants in Belfast
As of this month there are new guidelines on self employment which aim to help contractors and consultants determine their tax liabilities and bring clarity.
The IR35 rules were originally set up to prevent 'disguised employment' where an employee would typically set up a limited company and invoice their employer for their services via the limited company. In doing this, the employee could minimise tax and NIC liabilities by drawing a low salary and dividends from their limited company.
These new guidelines will be welcomed by thousands of self employed consultants and contractors who have legitimately set up limited companies, but have lived in fear of being caught by IR35 legislation because it was so confusing.