What are the IR35 tax rules?
A. IR35 was first proposed in the 1999 Budget. The purpose of the IR35 rules is to remove opportunities for the avoidance of tax and Class 1 National Insurance Contributions (NICs) by the use of intermediaries, such as service companies or partnerships, in circumstances where an individual worker would otherwise be an employee or an office-holder of the client. IR35 is most applicable to workers in the IT, telecoms, engineering, oil, gas, offshore and pharmaceutical industries and to interim managers. However, the legislation is such that any personal service company may be affected. If engagements are deemed to be within IR35 then the tax and NI burden increases by approximately 15%.
