IR35 effect

The effect of IR35

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.