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These rules have been in place for a long time but Gordon Brown decided to dust them off more recently because in general IR35 has not been as successful as he had hoped regarding tax and NI collection.
In basic terms the Inland Revenue are looking to try and prevent small one person companies taking income from one person and sharing this with family members (simply to reduce tax costs).
As an example of this:
£84,000 turnover
£10,000 allowable business expenses
£74,000 income remains which will be assessed for tax purposes
In the event this income were shared between a husband and wife joint owned Ltd company then it is certainly feasible that the business and the individuals would not pay Higher Rate tax.
This is because you could structure the business to pay £37,000 to each Director and keep the total taxable income per person below the threshold to pay 40%.
Clearly this is an area that the Revenue are clamping down on so when discussing this we will be very open, honest and guide you down the best route but without taking risks with your income and tax affairs.
Please contact us to arrange a meeting with one of our professionals if you require more assistance.
For Limited company enquiries:
ltd@accountants4contractors.com
For accounting enquiries:
accounts@accountants4contractors.com
For financial enquiries:
financial@accountants4contractors.com
