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So as I move on to the next stage of my life and the realisation that soon i'll be a self employed IT contractor I'm beginning to realise that there are a lot of things that have to be taken into account. One of the most important of
these is the issue of Tax, and how to play by the rules but still maximising your income. I've been doing a lot of research on this and was more than a little upset when I came across IR35, the UK Governments most effective weapon against those that choose to
go self employed and decide to try and earn a living for themselves and possibly others. Way to go UK Government, really encourage that entrepreneurial spirit why don't you!
So what is IR35? Basically IR35 is a piece of UK tax legislation introduced to remove the tax practices of "disguised employment". This put simply is to prevent workers from setting up limited companies via which they can work effectively as employees, but save on their tax liability. Heaven forbid giving the people who are taking a personal risk in setting up a business some sort of a chance.
With the introduction of IR35 the Inland Revenue now has the statutory power to look through the contractual arrangement between the Contractor and the Client and assess a hypothetical contract.
Unfortunately this legislation has also had a dramatic effect on the knowledge based industry where a UK IT Contractor could be deemed to be "employed" by a client or agency - even if they are clearly self employed!
As I mentioned I did quite a lot of research on this and luckily for me the news is good. The Isle of Man doesn't have IR35 or anything equivalent, so if things take off and I have the opportunity to set up a private company I won't have to worry about IR35. I think that if I was an IT Contractor in the UK I would seriously consider some sort of arrangement that would allow me to
be employed by a Manx company. Whilst looking into this I had the chance to deal with thetaxadvantage.co.uk and if you like to deal with friendly professionals why know their stuff i'd suggest you do the same.
Of course the IR35 legislation affects more than IT Contractors, whatever your industry Ambitions Professional Services are likely to have a product that will suite you. Ranging from CIS (Construction Industry Scheme) management solutions all the way through to gross pay for UK contractors and offshore bank / expatriate services.
ITContractors, get your IR35 obligation sorted for you
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