Information on IR35

IR35 has existed since 1953 and has been the principal legislation governing the tax affairs of public sector employees in England, Wales and Northern Ireland. IR35 does not apply to companies and those who use one do so for personal tax or corporate purposes only. The following sections explain what IR35 is and who it applies to.

IR35 is designed to ensure that public sector workers pay their fair share of tax and are not paid under more favourable tax rules than they would be employed to do. What is Taxable Pay? To find out if someone has been working in the public sector, check if they have been on ‘taxable pay’. Taxable pay is the amount that they would normally earn in their job if it was a personal, not a public sector, job.

Ever wanted to know how much you could earn through a Limited company? Or are you thinking about leaving your IR35 status behind and being an independent contractor? An independent contractor can therefore collect PAYE on all their income and pay it into their bank account. However, due to the way the law is structured, an independent contractor will need to also be classed as self-employed and pay NI (National Insurance), corporation tax, payroll tax and a host of other taxes as well as meeting certain contractual obligations. These liabilities may also sometimes cause people to fall into IR35 which will create an additional tax bill.

See how IR35 affects your take home pay using our IR35 Calculator

Calculating take home pay through umbrella company

Within this calculator, you will find a range of different options including a minimum and maximum pay rate, per hour and per day, depending on how much you want to be paid in the first place. Each option in the calculator will also provide you with the company name, the office location and the number of employees to generate the numbers.

How does the umbrella company calculator work?

When you first choose which option best suits your needs, you will receive an estimated quote based on your current pay rate and your workload. You will then be able to move between the different options at any time to suit your budget and requirements.

Consult our how to choose umbrella company guide for all the best tips on umbrella companies and IR35.

Calculating take home pay through Limited Company

If you are currently employed and under IR35, the only way to earn under the PAYE threshold is through an umbrella company or self-employed. So if you have been self-employed, we will help you understand how a limited company works and how you can earn through a limited company and keep your salary under the PAYE threshold.

Can I still opt for an IR35 VAT registration, if I am self-employed and plan to engage with an umbrella company?

If you work with an umbrella company, or if you intend to engage with an umbrella company, you may be able to register for a VAT registration. It is always preferable to register for VAT to avoid potential tax penalties and issues with Customs.