IR35 is a term that often causes concern among those working through limited companies.
These HMRC rules focus on ‘disguised employment’ and determine how individuals can legally pay themselves via their company. While the rules can be daunting, recent updates provide some clarity—particularly for the transport industry.
HMRC recently released a factsheet aimed at helping workers in the transport sector understand how IR35 applies to them. One key point highlighted is the importance of financial responsibility. If you are financially responsible for your work—such as hiring, owning, or leasing your van—you are not considered an employee under IR35. This distinction can have a significant impact on how you are taxed.
Specifically, being outside of IR35 means you won’t be required to pay employee income tax at 20% or National Insurance Contributions (NIC) at 12.8% on your salary. Instead, you can continue to benefit from the tax efficiencies of working through your limited company. This update is good news for many in the transport sector, providing greater certainty around their tax obligations.
For those unsure of where they stand, it’s essential to assess your working practices and contracts carefully. Are you genuinely in business for yourself? Do you maintain control over your work, take on financial risks, or own the tools and equipment needed for your role? These factors can help determine your IR35 status and ensure compliance with HMRC rules.
At Verion Accountancy, we understand that navigating IR35 can feel overwhelming. That’s why we’re here to help. Whether you’re in the transport industry or another sector, our expert team can guide you through the process, helping you stay tax-efficient while remaining compliant.
If you’d like to discuss how IR35 impacts your business, contact us today—we’re happy to help!