Update on IR35 – what you need to look out for…

Author: Russell Smith
July 20, 2015

If you are a one person limited company and you only do work for one customer, it is possible that you will be caught by the IR35 rules.

These rules were introduced to eradicate the tax benefits of an employee setting up as a limited company and then working for the previous employer.

It can be a complex area but very simply, if you work for more than one customer you will generally avoid IR35.  If also, your service can be given to the customer by someone else (i.e. a freelancer), this will avoid IR35.

If you can avoid IR35, you will want to, since effectively you will be taxed as an employee and lose the tax benefits of being a limited company.

Either way it is worth checking this out since George Osborne announced in the most recent budget a crackdown on ‘personal service’ companies so it is likely to be on HMRC’s agenda.

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