IR35 Anti Avoidance Rules for Personal Companies

Anti avoidance rules apply if:

• an individual works for a large company (LargeCo) via an intermediary business (PersonalCo); and
• the individual would be deemed an employee of LargeCo but for PersonalCo

If the individual is in substance, an employee then, in addition to being taxed normally on what has happened during the year, he will be taxed on a deemed salary calculated as below:

Total deemed salary
Total amount invoiced to LargeCo by PersonalCo
Less: 5% deduction
Less: Gross salary and employer’s NIC paid to individual in the year by PersonalCo

The following is then payable to the Inland Revenue based on the above amount:

• Employer’s NIC
• Employee’s NIC
• Income tax

This will be payable as if the deemed salary was paid on 5 April.