IR35 Assessment - Check IR35 Status for Tax

Assessing your employment status for tax purposes is crucial because it determines how much tax you need to pay. If you are inside IR35, you need to pay income tax and NICs as an employee. However, if you are outside IR35, you can benefit from lower tax rates. To help you determine your employment status, we have created the IR35 Assessment Tool.

By answering some questions around your contract details and working practices, the tool evaluates whether you fall inside or outside IR35, helping you make informed decisions and stay compliant with tax laws. Our tool is user-friendly, accurate, and regularly updated to reflect the latest IR35 regulations.

What is IR35

IR35, also known as the "intermediaries legislation" or "off-payroll working rules", is a set of tax rules in the UK designed to identify workers who are, for tax purposes, employees. These rules apply if a person works for a client through an intermediary, such as a limited company, but would be an employee if the intermediary was not used. The significance of IR35 lies in its impact on how you are taxed.

IR35 legislation is designed to determine if a worker is a genuine contractor (outside IR35) or should be considered an employee for tax purposes (inside IR35).

Inside IR35: If your working arrangement is deemed to be similar to that of an employee, you are considered inside IR35. This means you have to pay income tax and NICs just like a regular employee would. Essentially, your intermediary (often your limited company) needs to operate PAYE (Pay As You Earn) on your earnings.

Outside IR35: If your working arrangement is more like that of a self-employed individual, you fall outside IR35. This allows you to pay yourself through dividends, which are taxed at a lower rate compared to income tax. You also benefit from greater flexibility in how you manage your earnings.

Who Needs to Use the IR35 Assessment Tool?

Our IR35 assessment checker is essential for anyone involved in contracting, freelancing, or hiring contractors. Here’s who should use it and why:

Contractors and Freelancers

As a contractor or freelancer, if you work through a personal service company (PSC) or any intermediary, you need to check if your contracts fall inside or outside IR35. This tool helps you determine your IR35 status quickly and accurately.

Scenarios Where the Tool is Essential

• New Contracts: When you take on a new contract, it's important to know if it will be treated as employment for tax purposes.
• Contract Renewals: Even if you’ve checked a contract before, renewing it might change your status.
• Changing Working Practices: If the way you work changes, it can affect your IR35 status.

Businesses

If you hire contractors, it's your responsibility to determine their IR35 status. This is important to avoid penalties and ensure you’re meeting HMRC requirements. Our tool makes this process simple and reliable.

Scenarios Where the Tool is Essential

• Hiring New Contractors: Before you bring a new contractor on board, use the tool to check their IR35 status.
• Ongoing Contractor Relationships: Regularly check the status of your contractors, especially if their roles or working conditions change.

Why Use an IR35 Assessment Checker Tool?

Taking the IR35 assessment is essential for contractors and freelancers to ensure compliance with tax laws. It helps determine whether they need to pay taxes as a regular employee (inside IR35) or as a business (outside IR35). Our IR35 tool is developed by experienced contractor accountants and offers a seamless way to determine your IR35 status. Our IR35 assessment checker is trusted by thousands of contractors and provides a reliable means to assess your IR35 status with confidence.

Here are the key factors and steps to assess IR35 status:

Using an IR35 Assessment Tool is essential for contractors, freelancers, and businesses for several reasons:

• Accurate Status Check: The tool provides a reliable way to check if you fall inside or outside IR35.
• Compliance Assurance: Ensures you meet HMRC regulations, avoiding potential legal issues.
• Financial Clarity: Helps you understand your tax obligations, preventing unexpected tax bills.
• Risk Mitigation: Reduces the risk of penalties and fines associated with misclassification.

How to Complete Inside vs Outside IR35 Assessment?

Using the IR35 Assessment Tool is straightforward and simple:

1. Answer a Few Questions: Start by answering some questions about your contract terms and working practices. The tool will ask about details such as your role, control over your work, and how you’re paid. These questions help determine if you fall inside or outside IR35.
2. Enter Your Contact Details: Next, provide your contact information. This step is essential so we can send you your assessment results directly.
3. Submit Your Information: After completing the questions and entering your contact details, click the submit button. We will review your answers and send you the assessment results via email soon.

Factors to Consider for IR35 Status Determination:

When assessing IR35 status, consider several key factors. No single factor is determinative; rather, the overall working relationship is crucial. Some factors to consider include:

• Supervision, Direction and Control: This aspect examines how much control the client has over your work. If they dictate how, when, and where you work, you may fall inside IR35. However, if you maintain autonomy over these aspects, you're more likely to be outside IR35.
• Substitution: IR35 considers whether you can send someone else to do your work if you're unavailable. If the client insists on your personal service, you're likely inside IR35. On the other hand, having the freedom to send a substitute suggests you're outside IR35.
• Mutuality of Obligation (MOO):This refers to whether the client is obliged to provide work and whether you're obliged to accept it. If there's an ongoing obligation for work and payment, you may be inside IR35. However, if each project is separate and you're not obligated to accept future work, you're likely outside IR35.

Other Factors Affecting IR35 Status

Several additional elements can influence the determination of your IR35 status:

1. How You Are Paid: The method and frequency of payment can indicate your employment status. Being paid a regular salary on fixed dates suggests an employment relationship, while invoicing for completed projects leans towards self-employment.

2. Alternative Work: The ability to take on multiple contracts simultaneously or engage with other clients can demonstrate self-employment and independence from a single employer, strengthening your case against IR35.

3. Equipment: Providing your equipment and tools for the job supports the notion of being in business on your own account, indicating self-employment.

4. Premises: Working from your own premises rather than the client's location suggests autonomy and control over your working arrangements, aligning with self-employment.

5. Corporate Involvement: Involvement of a company structure, such as operating through a limited company, can indicate a business-to-business relationship rather than one of employer and employee.

6. Financial Risks: Bearing financial risks, such as covering business expenses, such as liability for rectifying mistakes or incurring losses, demonstrates an entrepreneurial approach and supports a self-employed status.

7. Employee Type Benefits: Access to employee benefits like sick pay, holiday entitlement, or pension contributions from the client may indicate an employment relationship.

8. Part and Parcel: Being integral to the client's organization, working alongside their employees, and being subject to their rules and policies suggest employment rather than self-employment.

9. Intentions of the Parties: The intentions stated in the contract and the actual working relationship between you and the client can influence how HMRC perceives your employment status.

10. Right of Dismissal: The ability of the client to terminate the contract without notice. The terms surrounding contract termination, such as notice periods and the ease of termination, can indicate the level of control and mutuality of obligation, impacting IR35 status.

11. Blacklists: Being included in a client's internal or industry-wide blacklist of contractors may suggest an employment relationship, affecting your IR35 status.

Considering these factors alongside the core aspects of IR35 assessment can provide a comprehensive understanding of your employment status and guide your compliance efforts.

Use our IR35 Assessment Tool today to get a quick and accurate determination of your employment status. If you need expert advice, consult with contractor accountants who can offer tailored support and guide you through the complexities of IR35. Check Your IR35 Status Now!

Frequently Asked Questions:

How does the IR35 Assessment Tool work?

The tool asks you questions about your contract and working practices. By answering these questions, the tool evaluates your situation and determines whether you fall inside or outside IR35.

Who needs to use the IR35 Assessment Tool?

Contractors, freelancers, and businesses that hire contractors should use the tool. It's crucial for checking if your contracts fall inside or outside IR35.

How accurate is the IR35 Assessment Tool?

The tool is designed to provide a precise assessment based on current IR35 regulations. It considers various factors like your contract terms and working practices.

What happens if I'm inside IR35?

If you’re inside IR35, you must pay similar taxes to an employee, including National Insurance contributions. It means higher tax liabilities but ensures compliance with HMRC.

Can the tool be used for multiple contracts?

Yes, you can use the tool for different contracts and scenarios. It’s helpful for checking new contracts, renewals, and changes in working practices.