Many of those who are new to IT contracting may wonder what IR35 is and how it will affect them. We explain here.

Previously, most contractors, especially IT contractors, generally used limited companies. Their income is paid into there and they extract expenses and salary from it before paying both Corporation Tax and personal tax.

Several years ago, the Government decided that some classes of contractor were really not contractors at all.

What they were really looking at were those people who were permanent on the Friday at a company and the next Monday they had become contract staff.

They felt, probably correctly, that these were disguised employees and that this was just a ruse on the part of the company and the new ‘contractor’ to avoid taxation.

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