Why there is the need for IR35

Why there is the need for IR35

Any freelancer would be pretty familiar with the IR35 rules. It concerns all contractors who are not “self-employed”. IR35 became law through Schedule 12 of the Finance Act 2000, and was brought into existence to stop freelancers from using their limited companies to evade taxes. This regulation meant that freelance contractors paid taxes similar to those under the regular PAYE conditions.

There were many people who would rejoin their jobs, but work via a limited company. They get paid a lot more than previously this way for doing the same job. But they would still pay less tax than they should, and thus evade taxes. This was the primary reason that forced the authorities to put into place the IR35 regulations. And judging by the way the rule has been working, the decision has been completely vindicated.

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