IPSE believes there is a growing need to create a new company structure, tailored specifically to freelancers. The new structure should provide certainty of tax and employment status to businesses, while also protecting revenue for the exchequer. IPSE has been working with EY to develop a concept which meets these characteristics – the Freelancer Limited Company (FLC).

The FLC is designed to provide a benign environment for freelancing to flourish. IR35 would not apply to the FLC, as businesses within the structure would have already demonstrated they are not disguising employment.

Businesses should be able to choose FLC status – they must not be forced into it – and they would have to meet certain criteria in order to qualify to be an FLC

It would be a normal company formed under the Companies Act but would operate under particular restrictions in order to qualify for specific tax treatment.

A thorough consultation with IPSE’s membership on the FLC took place last year. This helped to shape the proposal paper – available here


Recent legislation and current Government proposals have left IPSE in no doubt the limited company structure, used by the majority of our members, is under attack. Academic research also shows the uncertainty inherent in IR35 deters companies from taking on contractors, hampering economic growth. IPSE has long protested against IR35 but decision-makers have told us we must provide alternative solutions.

Accordingly, IPSE begun to develop the FLC, a new, optional corporate form which would remove independent professionals from the burden of IR35 and provides clarity of employment status.

The need for a Freelancer Limited Company: no more ‘business as usual’

Since IPSE first called for the FLC in our 2014 manifesto, the operating environment for freelancers has become even more hostile, further underlining the urgent need to propose a solution. Government has introduced a series of alarming proposals including changes to tax relief on travel and subsistence expenses, the new dividends tax and changes to IR35 for public sector engagements potentially creating significant burdens for those working through their own limited company.

The status quo is changing. Although IPSE has and will continue to robustly fight these proposals, we must consider what the new status quo will be. IPSE asked Christopher Sanger, Head of Global Tax Policy at EY, to set out his own thoughts on what the Government's proposals will mean and why the FLC is the appropriate policy approach to take. Read his letter to IPSE's Director of Policy and External Affairs here

Working with Government to bring the FLC to life

The paper was sent to HM Treasury and HMRC (as part of IPSE’s response to the IR35 discussion document last year) as well as the Office of Tax Simplification (OTS).

The OTS endorsed further consideration of the FLC it in its report on Small Company Taxation:

“We think this developed FLC concept is worth considering further. … if the criteria for the FLC are properly set it could deliver certainty (and hence simplicity) to a large body of freelancers and contractors. At the same time, we are conscious of the risks involved with seeking to give a route out of the ambit of IR35. We are not in a position to make a formal recommendation about the FLC, but we or others may return to the subject in future work.”

We have held productive meetings with HMT and HMRC officials on the concept and are hopeful that real progress will be made to introduce the FLC as viable option for those who work for themselves.

Please keep checking this page for further updates.