Contractor Calculator: Inside IR35 PAYE Calculator
The IR35 (Intermediaries Legislation number 35) is a legislation that was first introduced back in April of 2000. The aim of this legislation is meant to get rid of any tax avoidance and National Insurance Contributions (NICs) avoidance through the use of intermediaries including ones such as the Personal Services Companies and other partnerships. The IR35 is meant to focus on workers who are:
- To be regarded as an employee of a client for several tax accounting reasons.
- To be regarded as an employee by a client for NIC purposes.
If you are included in the IR35, your earnings will be subject to PAYE and both income tax and National Insurance Contributions will be deducted from all of your earnings.
If you are not included in the IR35, you are able to take dividend payments from your company's profit which will not fall subject to any National Insurance Contributions (NICs). Although you should note that if you operate your own limited company and not use any intermediary companies (such as an umbrella company), you will be able to receive any dividend payments.