IR35 Legislation, A Quick Recap

The IR35 legislation has been chopping and changing for years now, but to fully understand its current position, one must first look to its past. From this we see that everything IR35 has been building momentum and is ever increasing in importance.

The IR35 legislation has been undergoing changes since way back in July 2010, when the office of ‘Tax Simplification’ came into play as an attempt to ensure small businesses with a simplified system of tax. A number of treasury officials and tax experts were put in charge of reviewing the whole system regarding IR35, and soon after, the decision of whether or not to scrap or improve the system was put forth. This decision was obviously going to affect freelancers and contractors massively as IR35 is a huge concept to any self-employed professional.

Following on from this, this new ‘Office of Tax Simplification’ released a report that had come to a semi definite decision regarding the future of IR35, and it stood as follows:

-       Suspended and subsequently abolished
-       Be retained, and that the government improve the administration of it

With this decision up in the air, the world (of contractors) was poised, eager to hear the decision of the tax office regarding the elusive IR35 legislation. When the 2011 budget was released, the news was confirmed that IR35 was here to stay, and that guaranteed improvements were to be made. The IR35 legislation was deemed too important and necessary to scrap, and after administration developments, a new and enhanced legislation was going to be introduced.

This decision was something that has hugely affected contractors and freelancers alike ever since, and it is always helpful to understand when and why legislations were passed in order to fully understand and appreciate them.

By:Steven Bailey

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