Off-Payroll Working (IR35)

If you're a contractor or freelancer in the UK, you may have encountered the term "Off-payroll working" or "IR35." But what does it mean, and how does it affect you?

What is IR35?

IR35 applies when a worker provides services to a client through an intermediary, such as a personal service company, and would have been classified as an employee if they were providing services directly. Essentially, if the working arrangement resembles employment, IR35 ensures that the contractor pays similar Income Tax and National Insurance contributions as an employee.

IR35 status

Determining your IR35 status can be complex as it depends on various factors, including:

• The level of control you have over your work
• Whether you use your own equipment
• If you can send a substitute to do your work

IR35 Enquiry

Even if you believe you fall outside IR35, HMRC can still open an enquiry. These investigations can be lengthy and complicated, sometimes leading to HMRC reclassifying your status.