Tax & Status
IR35 / Off-Payroll Working Rules
In force
April 2021 (private sector medium/large)
Applies to
Medium and large UK businesses engaging contractors via PSCs
Requires the end client (or fee-payer) to assess employment status of contractors operating through their own limited companies and operate PAYE if inside IR35.
Key Points
- Status Determination Statement (SDS) must be issued for every engagement
- Reasonable care must be exercised in the determination
- Contractor has right of appeal
- Small companies exempt (use Companies Act 2006 small company test)
Practical Steps For Your SME
- Confirm whether your business meets the small company exemption
- If not, use HMRC CEST tool plus manual review for every contractor
- Issue SDS to contractor and any agency in the chain
- Operate PAYE for inside-IR35 engagements via the fee-payer
Penalties
PAYE/NIC liability passed to client, plus interest and penalties up to 100 percent.
Free Resource
Stay ahead of IR35 changes
Get the 2026 UK SME Compliance Pack, every regulation summary, every template, every April 2026 rate. Free.
Other regulations to know
Stop Tracking Regulations Manually
Infinity Connect members receive plain-English alerts whenever a regulation changes, plus the templates and workflows to comply. Included.