I am a freelance teacher, working through a Personal Service Company, and for tax purposes my work would qualify as self-employed. Does IR35 affect me?
Yes. Under IR35, your Personal Service Company is responsible for Class 1 National Insurance contributions (NICs) if you would be regarded as employed in "employed earner's employment" if you provided your services under a contract directly with your client, rather than through your PSC.
Special NICs rules say that a freelance teacher is regarded as an "employed earner" (subject to certain exceptions) (Schedule 1, Part 1, paragraph 4 column (A) of the Categorisation Regulations). So if you are a freelance teacher working through a PSC then your PSC may be liable for Class 1 NICs.
If you work directly for your client and not through a PSC then IR35 will not be relevant and the special NICs rules will mean that your client is responsible for the relevant Class 1 NICs.
If you provide your services via an entity which meets the definition of a Managed Service Company (Chapter 9 ITEPA 2003), then all of the income you receive via the MSC will be treated as employment income and subject to Income Tax and Class 1 NICs.
| Home | ||||
