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How is this treated?
if you’re company is considered as IR35, does that mean everything you earned will be deemed as a salary? or is it the other way around?
Does IR35 means that you’re treated as a company rather than an employee?
If you are inside IR35 you are considered a disguised employee.
If you are outside IR35 you are considered a limited company.
There are quite a few tests such as (below are a few)
1. Terms in the contract
2. Does the worker bring there own tools to work
3. Does the worker have control over their day to day duties.
4. Has the worker taken on any financial risk to gain clients such as advertising.
5. Can the worker provide a replacement worker.
6. Does the worker have access to the same benefits as the normal employees on the siteIf you are outside IR35 then you can calculate payments to the director/employee of the company as per the usual low salary high dividends to be tax efficient.
If they are inside IR35 then you can claim 5% deduction from gross revenue to offset as expenses, then any remaining profit is deemed to be salary and is subject to PAYE
thank you! better explanation than my text book!
does PSC and ir35 mean the same thing?IR35 is the legislation (law) that has been created by HMRC
PSC is a Personal Service Company, so the PSC is simply the vehicle which the worker uses to carry out their trade. (generally a ltd company, with 1 director who is also the only shareholder, very similar to a sole trader except they are operating inside a ltd company)
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