Q. I am a ltd company but operate on a minimum wage scheme and most of my money is made up of expenses and dividend payment.
How will ir35 affect me from the 6th of April?
A. This will depend on your circumstances. If you are contracted to a public sector client, the client will be responsible for determining your status from 6th April. How this will affect you from 6th April will depend on whether the public authority deem you to be inside IR35 or not.
If you are deemed as inside IR35, then the fee payer (usually the agency but could be the public sector body) will deduct basic rate tax & employee’s NIC from the net fee. Provided you don’t withdraw profits from your company greater than the net fee received, there will be no further PAYE implications. At the end of the tax year, the contractor will then complete their SATR & compute their tax liability based on their total income. This is determined on a contract by contract basis so you may have, in the same year, income which has applied PAYE by the fee payer and income which can be drawn as dividends as normal.
If you are deemed as outside of IR35, you should be able to continue as normal, drawing a minimum salary and drawing the rest as dividends.
You will need to speak with your end client/agency to clarify their stance.
If you are not working in the public sector, then your working arrangements should remain unchanged
If (hypothetically) I contract inside IR35 and go PAYE or Umbrella, who pays the employers NIC? I have had some agencies tell me that they will still deduct this from the pay. I thought that if I was PAYE or under an umbrella then technically I am employed and that means I only pay NI and employees NIC. Can someone clarify please?