When IR35 applies, the PSC’s income from the work carried out for the
client is regarded as the worker’s earnings, chargeable to tax as their
employment income and subject to Class 1 NICs. This is an “employment
payment” to them by the PSC. IR35 includes long and detailed formulae to be
used to calculate the amount and time of receipt of this “employment
payment” to each of a PSC’s workers.
IR35 also impacts other areas of taxation and must be taken into account in
various situations, such as when dealing with self-assessment or
corporation tax returns.
IR35 also covers benefits other than monetary payment.