Why do we need to know how you provide your services?
We need to know how you provide your services so we know whether to apply off-payroll working rules – known as IR35. (For more information on IR35 see our freelancer ebook on the IR35.com website.)
The off-payroll working rules apply where an individual (that’s you) provides their services through some kind of personal intermediary to their client. The rules apply to any kind of intermediary, like a company, a partnership, another person or an unincorporated association. HMRC refers to these types of intermediaries as a ‘personal service company’ or ‘PSC’ for short.
How can I tell if I’m using a PSC?
If you’ve registered your company at Companies House, and you’re the sole shareholder and director, that’s definitely a PSC. You’ll also be a PSC if you hold 5% or more of the share capital and voting rights in the company.
There are also some other (not very common) ways of being a PSC: you’ll also be a PSC under the IR35 rules if the intermediary through which you provide your services meets either of these criteria:
- It’s a partnership of which you are a member and are entitled (either alone or with members of your family, which includes spouse, civil partner or person with whom you live as if you were spouses or civil partners) to at least 60% of the profits, or one in which your share of the profit is linked to the payments under contracts for your services and the majority of the partnership's income derives from the provision of services to a single client and its associates
- It's another individual
What’s an umbrella company?
An umbrella company is a company which you have registered to be an employee of, so that they run PAYE on the revenue you receive for providing your services.
We only allow freelancers using FCSA-accredited umbrella companies.
The off-payroll rules don’t apply to your assignments if you provided your services through an FCSA-accredited umbrella company.
What’s a sole trader?
A sole trader is someone providing business services as an individual.