ir35 for contractors
While most residents of the United Kingdom
Even Honest, Diligent Freelancers Increasingly Get Caught Up in the U.K.'s IR35 Tax Rule
While most residents of the United Kingdom still regard paying the taxes they owe as a patriotic duty, that does not mean it doesn't often hurt. Tax rates in the U.K. are higher than in some other countries in nearby continental Europe, partly to pay for the generous social guarantees that residents enjoy. Those rates can also be especially high, it turns out, for those who work independently as freelancers or contractors.
Because of this, people who freelance as a way of making a living have long sought avenues for reducing their tax burdens. With this style of work becoming increasingly common, in fact, quests of this sort are more usual than ever before.
At the same time, the U.K.'s tax authorities are well aware of the situation, too. In 2010, in fact, they passed a new regulation designed at warding off a certain kind of tax dodge that they had come to consider abusive. Normally referred to as "IR35," the regulation is meant to bring to light ostensibly contractual arrangements that are actually more like conventional employment.
For most people who honestly commit to freelancing, this regulation should ideally not be an issue. As such things go, though, it turns out that IR35 often ensnares even the most honest and upstanding of freelance workers. For those who get caught in its nets, substantial penalties and ir35 explained bloated tax bills can await, meaning that virtually everyone who freelances does well to be aware of the issue.
Most freelance specialists, of course, have an umbrella company of their own, as receiving earnings through such a shell company is the single simplest way of bringing tax obligations down to a more manageable level. It is exactly this precaution, though, that leads to many people falling afoul of IR35 every year, simply because they did not realize how to ward against this danger.
Working with consultants like UK Contract Partners can be a good way of ensuring that these unfortunate consequences do not pile up. It actually takes relatively little to establish that an umbrella company is a legitimate way of structuring income and tax payments, as these specialists are normally able to quickly point out. With a little such help and some time spent with a uk contractor tax calculator, then, freelancers in the U.K. can easily enjoy the freedom that career path represents, while not needing to worry about unforeseen consequences of a negative sort.
Because of this, people who freelance as a way of making a living have long sought avenues for reducing their tax burdens. With this style of work becoming increasingly common, in fact, quests of this sort are more usual than ever before.
At the same time, the U.K.'s tax authorities are well aware of the situation, too. In 2010, in fact, they passed a new regulation designed at warding off a certain kind of tax dodge that they had come to consider abusive. Normally referred to as "IR35," the regulation is meant to bring to light ostensibly contractual arrangements that are actually more like conventional employment.
For most people who honestly commit to freelancing, this regulation should ideally not be an issue. As such things go, though, it turns out that IR35 often ensnares even the most honest and upstanding of freelance workers. For those who get caught in its nets, substantial penalties and ir35 explained bloated tax bills can await, meaning that virtually everyone who freelances does well to be aware of the issue.
Most freelance specialists, of course, have an umbrella company of their own, as receiving earnings through such a shell company is the single simplest way of bringing tax obligations down to a more manageable level. It is exactly this precaution, though, that leads to many people falling afoul of IR35 every year, simply because they did not realize how to ward against this danger.
Working with consultants like UK Contract Partners can be a good way of ensuring that these unfortunate consequences do not pile up. It actually takes relatively little to establish that an umbrella company is a legitimate way of structuring income and tax payments, as these specialists are normally able to quickly point out. With a little such help and some time spent with a uk contractor tax calculator, then, freelancers in the U.K. can easily enjoy the freedom that career path represents, while not needing to worry about unforeseen consequences of a negative sort.