The off-payroll working rules, sometimes known as IR35, make sure that a contractor pays broadly the same Income Tax and National Insurance as an employee would. They apply if you work through your own intermediary, usually a limited company, and would have been an employee if you were working directly for the client.
Key points
✓In most cases the client decides your employment status for tax and must give you a status determination statement with its reasons.
✓If the client is a small business outside the public sector, your own intermediary decides instead.
✓If you disagree with a determination, the client has 45 days to respond.
✓The rules are unlikely to apply if you are employed by an umbrella company.
Who do the IR35 rules apply to?
You may be affected if you are a worker who provides services to a client through your own intermediary, a client receiving those services, or an agency supplying the worker. The intermediary can be a limited company, usually known as a personal service company (PSC), a partnership or another individual.
The rules apply on a contract-by-contract basis, so you may have some contracts inside the rules and some outside. A contract can be written, verbal or implied.
Who decides if you are inside IR35?
In most cases the client decides. If you provide services to a small client outside the public sector, your intermediary decides your employment status and whether the rules apply. A private or voluntary sector client is medium or large if it meets 2 or more of these conditions:
Condition
Threshold
Annual turnover
More than £10.2 million
Balance sheet total
More than £5.1 million
Employees
More than 50
If you do not get a determination, you can ask for confirmation of the client's size, and the client has 45 days to respond. A small client must confirm its size if asked.
What happens if you are inside IR35?
The deemed employer must deduct Income Tax and employee National Insurance from the fees paid to your intermediary, and pay employer National Insurance and, if it applies, the Apprenticeship Levy to HMRC.
Deemed employers do not deduct student or postgraduate loan repayments from the fees. You make those repayments by registering for Self Assessment and sending a tax return. Our take home pay calculator shows the employee tax and National Insurance on a salary for comparison.
How do you check your IR35 status?
HMRC's Check employment status for tax (CEST) tool gives HMRC's view of a worker's status based on the information you provide. HMRC will stand by all results given by the tool, as long as the information you give remains accurate and is in line with its guidance. The tool is anonymous.
How do you challenge a status determination?
Give details of the determination you disagree with.
Give your reasons for disagreeing.
Keep copies of any records about the disagreement.
You can raise a disagreement until the last payment is made for your services. The client has 45 days from receiving it to respond, and the deemed employer keeps applying the original determination in the meantime.
If the client does not respond within 45 days, the worker's Income Tax and National Insurance become the client's responsibility.
Does IR35 apply if you work through an umbrella company?
The rules are unlikely to apply if you are employed by an umbrella company. HMRC warns that some schemes wrongly claim to get around the rules, and new PAYE rules for labour supply chains that include umbrella companies started on 6 April 2026.
Our work and industry guides cover other rules for people at work, and our guide to tax refunds explains how to claim back tax you overpaid.