Do the new HMRC IR35 rules affect the way freelancers are paid?
Added 5 years ago
Do these rules mean you can no longer invoice with a UTR and fill in a tax return unless you are a limited company? Does it class most contracts as PAYE and therefore mean we should just be on PAYE instead?
2 Likes 
David Thomas
Hi Sunil. - the new IR35 rules only apply to people who freelance through their own limited company. People who freelance as a sole trader (which presumably includes you?) are unaffected by the legislation.
Rachel Clark
Is this true? I thought they also included the 7-day rule, in that if you are employed via long term contracts they would consider you PAYE? I am not 100% sure, but have been told by productions that applies. Also I know plenty of freelancers via their own limited companies, some have been told they are fine, others not, so I am not sure it is that simple.
Load 3 more comments...
Riaz Jugon
IF you work as a LTD company and if the company you're working for deems you "INSIDE" IR35 this will affect you as they will tax you at the source like you're an employee. If you fall "OUTSIDE" IR35, you can continue as per usual and look after your own tax affairs.
However, you will also need to have multiple revenue streams/clients to show that you are in fact freelance and not working for just one employer. If you're only working for one employer, HMRC might see this as a way you and your company are avoiding paying higher thresholds of tax. Therefore, working for 2 or more will show that you are not totally reliant on just one company to make a living, and it will show the company don't always need you, thus justifying only having you as a freelancer and not an employee.I hope that helps - this whole IR35 thing has been quite tricky to get my head around. I have clients who deem me inside, and others who deem me outside - which is not making my accountants happy!
SIMON PHILLIPS
It's certainly complicated, but one crucial thing to be aware of is before April it was the freelancer's responsibility either as a sole trader or Ltd company and the revenue would come after you the individual. After April it's the company hiring you and if they deem you to be inside IR35 it will be them who could be audited in years to come. So I've already experienced company's who don't want the risk and don't really care if you are working though a Ltd company they want you either as a sole trader or PAYE. There's all sorts of rules such as "who sets the time and place of your work....." Talk to your acct but it's not simple. But I imagine there could be lots of us winding up our Ltd co's in the next few years.
Justine Sullivan
the really annoying thing is, if this had come into play a couple of years back; directors like me of small LTD companies might have had a better chance of getting properly looked after via furlough/grants etc. If some of us had been forced to be PAYE then we might have been able to get more money, and not 80% of the minimum wage. We were forced to become a LTD company by many of the places we've worked and now we're being told we can't be. I do understand the reasons, but at the end of the day, we're all just trying to make a living...and being freelance is already hard!