What if my contract falls within IR35


If a contract you are working on is caught by IR35, there are specific rules set out by HMRC that tell you how to determine how much tax you need to pay. HMRC also specifies that you must pay the majority of your income as salary, although there are some expenses you may deduct from this total.

Your gross salary for tax purposes is calculated as follows.

  • All the payments your company has received (Net)
  • Deduct 5% allowance for expenses (5% of A)
  • Deduct qualifying expenses and any pension contribution
  • Deduct Employer's NI (D-7072)*13.8/113.8)
  • Gross Salary (D-E)


Accounts Direct can work out your tax liabilities for you, regardless of whether the contract you have taken on is within our outside the scope of the IR35 regulations. Clearly, for tax purposes, it is preferable to be outside the IR35 regulations and Accounts Direct can assist you in drawing up contracts which make it much less likely that HMRC will consider you to be directly employed by the client company.


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