What is IR35?

1.4 The tax plan of a freelance consultant must consider IR35

IR35 was a press release issued as part of the March 1999 budget.

The proposed legislation would dramatically affect how a contractor would be able to administrate their personal service companies and would substantially reduce the net earnings to be realised from contracting.
This met with opposition from many parties. We, in fact, represented the Institute of Chartered Accountants of Scotland at meetings with the HM Revenue & Customs on this matter.
The idea behind IR35 is to tax a contractor operating through personal service companies as if they were employees of the ultimate client for whom they are working.
Prior to IR35 a contractor employed by a personal services company could take significant money in the form of dividends instead of salary.

The intention of IR35 is to prevent the above to that in the words of the Government "every tax payer pays a fair share of tax".