First time IT contractor, not UK resident, Umbrella or Limited Company?

Asked by: Cindy Broz

Does IR35 apply to contractors outside the UK?

For IR35 purposes, no UK employment taxes should be payable by a company in respect of non-UK tax resident contractors engaged through PSCs if all their work is undertaken overseas, and the contractor does not enter the UK for their role.

Does IR35 apply to non UK residents?

If the contractor is based outside of the UK and is physically performing their services outside of the UK, the UK hirer company (not being a small company) may not be subject to the IR35 regulations.

Why do I need an umbrella company?

An umbrella company gives you the option of having an employer while still working on a contracted basis. That means you don’t have to worry about tax returns, because they’ll take care of it for you.

Is IR35 applicable if I work for a foreign company?

Contractors trading via a UK-based limited company and who are UK resident will find IR35 applies wherever in the world they are working. The locations where duties are performed have no bearing on IR35.

Are foreign companies subject to IR35?

This means that where the end client is wholly overseas, the old rules will apply and it will be the responsibility of the individual’s limited company to determine IR35 status. This will come as a huge relief for many contractors.

Can a UK company employ someone abroad?

If you’re employing staff abroad, you may need a local contract that sits alongside the UK contract. Check which social security laws will be applicable to their employment abroad. And you may have reporting obligations that you are unaware of – you’ll need to check in advance.

What is the difference between inside and outside IR35?

Being inside IR35 means your contract falls in the off-payroll working rules and HMRC sees you as an employee for tax purposes. Being outside IR35 means your contract points towards self-employment, so you can operate tax efficiently.