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Here's some info about the IR35 tax legislation rules which can affect self employed subbies and whether they are deemed to be inside or outside of the ruling:
In recent years the electrical industry has seen an increase in freelance workers or 'subbies'. It's an easier way for the companies to hire labour when needed without having to fully employ workers under PAYE.
Some workers even left their PAYE employment and went self employed or started a company and were then taken back on as a sub-contractor by the same company.
This was an easy way for them to reduce the tax they paid and was also less expensive for their employer who didn't need to pay employer's contributions, sick pay and holiday pay.
The IR35 rule is there to assess the way that your tax is calculated should your skills be seen to be provided in the same way as if you were employed on PAYE by the company. This could be applicable to labour only sub-contractors who work mainly for one company.
You generally need to be outside of the IR35 tax rules if you're self-employed or have your own company. If you're inside the IR35 ruling then you could be deemed to be breaking the inland revenue tax rules and both employer and subby could be liable for prosecution. More info here> What Is the IR35 Tax Rule? | Electrician's Blog
One way for Labour Only subbies to be used by a company on a regular basis and still to comply is where they are paid by a third party such as an agency, as long as all the CIS requirements are met.
In recent years the electrical industry has seen an increase in freelance workers or 'subbies'. It's an easier way for the companies to hire labour when needed without having to fully employ workers under PAYE.
Some workers even left their PAYE employment and went self employed or started a company and were then taken back on as a sub-contractor by the same company.
This was an easy way for them to reduce the tax they paid and was also less expensive for their employer who didn't need to pay employer's contributions, sick pay and holiday pay.
The IR35 rule is there to assess the way that your tax is calculated should your skills be seen to be provided in the same way as if you were employed on PAYE by the company. This could be applicable to labour only sub-contractors who work mainly for one company.
You generally need to be outside of the IR35 tax rules if you're self-employed or have your own company. If you're inside the IR35 ruling then you could be deemed to be breaking the inland revenue tax rules and both employer and subby could be liable for prosecution. More info here> What Is the IR35 Tax Rule? | Electrician's Blog
One way for Labour Only subbies to be used by a company on a regular basis and still to comply is where they are paid by a third party such as an agency, as long as all the CIS requirements are met.
