Effect of IR35

When IR35 does apply, the PSC’s income from the work carried out for the business client is regarded as the individual’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 rules include 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 individual 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.