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IR35 is the industry name for a specific part of the Finance Act 2000. It aims to prevent people avoiding tax by working as self-employed contractors through an intermediary limited company, while performing the same function as regular employees.
The legislation says that these kinds of contractors are in fact ‘disguised employees’ and should be subject to the same Income Tax and National Insurance Contributions (NICs) as regular employees.
In other words, the legislation ensures that if the relationship between the worker and the client would have been one of employment if it wasn’t for the intermediary, the worker pays tax and NICs roughly equivalent to an employee.
