What is IR35?
IR35 is the short name used for the intermediaries legislation, which is a set of tax rules that apply to you if you work for a client through an intermediary which can be a limited company or personal service company which is how many contractors operate.
If you are caught within the legislation then you can expect to pay about 25% more in tax every year, so you want to try and ensure that it does not apply to you!
Despite having been in force since 1999, it is heavily criticised by tax experts and the business community as being poorly conceived, badly implemented by HMRC and causing unnecessary costs and hardships for genuine small businesses.
- Introduced in April 2000. Being reformed in April 2017.
- If you are caught, you will pay circa 25% more in tax
- Based on complex employment case law
- Should not affect professional contractors
- Beware: Take professional advice to avoid
If you are a genuine professional contractor, freelancer, interim or consultant who is in business on your own account, you should have nothing to fear from IR35. This is so long as you take the time to understand how the legislation works and apply best practice to ensure it does not apply to you, and have a defence prepared if investigated by HMRC.
You can start by using our IR35 calculator below to determine how much extra tax you would have to pay if caught, and also use our online IR35 assessment to determine your status. Then our comprehensive guides will explain how you can ensure you never get caught by it.
IR35 Tax Calculator - calculate the cost of being caught
If the rules apply to you then you have to pay tax as if you were employed directly by the client, including employers and employees National Insurance Contributions. But you will not get any employment rights. Use the calculator below to work out the financial impact on you.
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Our top IR35 Guides
All of our IR35 guides
Can contractors using umbrella companies be caught by IR35?
Does working for an umbrella company enable you to avoid it?
Keeping control keeps IR35 away from contractors
To stay outside, you should ensure you are not under the supervision, direction and control of your clients.
How to prove IR35 does not apply to you
Want to prove IR35 does not apply to you? Learn the evidence to collect during a contract that will bat away the taxman.
International contracting and IR35
Where you pay taxes determines whether or not you have to worry. If you pay in the UK, then you have to worry.
Protect your contracting status by building an IR35 compliance file
If you create and maintain compliance files you can rest assured you will be able to prove your status.
Contractor strategies for long term IR35 defence
Contractors should be taking action now to help build future IR35 defences. Here's how.
IR35 - Top 10 traps to catch the unwary contractor
HMRC is always on the lookout for contractors who put themselves inside it by making easily avoidable mistakes. Here are the top ten traps to avoid.
IR35 avoidance: Staying outside if you go contracting for your former employer
When contracting for a former employer, you must prove your new relationship is different.
Contractors must demonstrate business risk as part of keeping contracts outside IR35
Demonstrating business risk can show a contractor as ‘being in business’, thereby helping the case for being outside..
IR35 and contracting bonuses – how to manage bonus payments
Contractors must adopt the correct terminology when agreeing to performance-based bonuses for a project.
IR35 issues for project managers working as contractors
Project managers can stay outside as long as they have no line management responsibilities.
Prove your contract is outside IR35 by collecting key evidence
Contractors generate evidence about it every day and by filing it they could halt an HMRC review at the outset.
Contracting top 10: Making sure IR35 won’t apply to you
HMRC is constantly on the lookout for ‘disguised employees’. Here are ten precautions you can take to ensure you don’t get caught.
Can your accountant keep you outside of IR35?
You should hire specialist accountants who can ensure you are taking all necessary steps to stay outside.
How public sector organisations need to prepare for the IR35 reforms – right now!
Use our expert five step action plan to retain skilled resources, cut costs and keep compliant with the public sector IR35 reforms.
How your accountant can keep you outside IR35
The expected private sector rollout of the IR35 reforms poses a unique threat to contractors but your accountant should be able to help. Here’s how.
How to get an IR35 pass using the HMRC CEST status tool
HMRC’s IR35 CEST tool will only pass contractors in cases of absolute certainty. Find out the few routes through the tool that can make you pass IR35.
CAM Ltd v Revenue & Customs: 5 key IR35 lessons for contractors
The first IR35 ruling in seven years provides several key lessons that contractors can use to avoid a heavy tax bill. Find out what they are, here.
How you can pass IR35 and save £000's by taking professional advice
Employment law is exceptionally complex and trying to do it without help could be very costly indeed. Read how professionals can help you.
Landmark tribunal judgement tells us who is an employee
The UK Employment Appeal Tribunal in London has handed down a critical decision on the definition of a worker--it directly affects contractors who could be considered employees.
Does length or number of contracts affect IR35 status?
Does how long you work at a place, or the fact that you have several different contracts affect your status?
If the client requests me personally, am I caught by IR35?
Many contractors who are the leaders in their field find themselves working for clients who will accept no substitutes. But this does not mean that the contractor is caught.
Reviewing your contract for IR35 status – a guide for contractors
You should always get your contract reviewed for status by an expert, to ensure you have taken ‘reasonable care’ in the eyes of HMRC.
IR35 contract problems: Top 10 reasons a contractor’s contract will fail
Contractor contracts are vital evidence that can be used by HMRC to place a contract inside. Don’t let your contract fail and cost you cash.
IR35 Rules: How to determine if your contract passes - 10 essential points
Signing a contract without checking whether it passes is taking a huge risk. Here’s what to look for before signing the contract.
Half my contract is onsite and half at home – am I caught by IR35?
Significant variations during a contractor’s contract can lead to different treatment.
Independent contractors – what are they? Employed or self employed?
Independent contractors are workers who are in business on their own account & provide their expert services to clients under a contract for services.
10 factors that don’t really affect your IR35 status
Be concerned, but don't be misinformed. Find out the top 10 myths about the legislation.
I’ve been outside IR35 and now think I’m caught. What should I do?
Contractors experiencing a sudden change of circumstances mid-way through a contract may find this alters their status and hits their finances.
IR35 applies to office holders unless there is no personal service
It will apply to any contractor who becomes an office holder unless they can prove that personal service is not required.
Contractor guidance on HMRC’s six IR35 example scenarios
You can use HMRC’s six example scenarios to help you decide whether it is likely to apply to your current contract.
Contractor guide on when IR35 will apply to overseas contracts
Contractors domiciled in the UK and working on overseas contracts will find that it still applies in most cases.
Role-based blanket IR35 assessments are unlawful and highly risky
IR35 blanket assessments based on assessing roles are unlawful and present huge risk, yet HMRC still encourages their adoption.
What is an IR35 Status Determination Statement (SDS)?
Learn what an IR35 Status Determination Statement is, why contractor clients will soon need to provide them, and why reasonable care is so important.
Financial impact of IR35 on contractors
A contractors take home pay is reduced by up to 25% when caught.
Contractors inside IR35 pay 14% more tax than permanent employees
If you are inside it and being paid via a deemed payment you will pay 14% more tax than a permanent employee, but get no rights.
The IR35 5% expenses rule
If you are caught by IR35 then make sure the 5% rule is used to maximise your take home pay. Here's how.
Limited company contractors with contracts inside and outside IR35
Having contracts both inside and outside need not be complicated for you to deal with.
IR35 penalties: the cost to contractors of being caught inside
Working on contracts inside means you must pay extra tax and, if caught without declaring it, you face steep HMRC penalties.
Off-Payroll (IR35) Tax: How to calculate and process ‘deemed direct payments’
Find out how to comply with the Off-Payroll tax rules and mitigate your tax risk by correctly calculating and processing deemed direct payments.
Limited company ‘inside IR35’ v umbrella PAYE – advantages and disadvantages
Contractors working ‘inside IR35’ following the implementation of the Off-Payroll legislation need to consider their preferred operating model.
Contractor guide to HMRC’s IR35 contract review service
You can ask HMRC to review you contract, but this could increase the risk of an enquiry, particularly if the contract is borderline.
Contractors can use HMRC's employment status resources to help with IR35 status
HMRC’s online manuals for tax inspectors’ use provide contractors with insights into how not to be seen as an employee and how to stay outside.
HMRC IR35 information and advice - a guide for contractors
Contractors can access information, guidance & advice online and by phone from HMRC, but it comes with a health warning as there are grey areas.
IR35 Business Entity Test for contractors – process and questions
You can help determine your level of risk by taking HMRC’s business entity tests, answering 12 questions about your business.
Contractor guidance on HMRC’s risk-based approach to IR35 & the business entity tests
You can use HMRC’s business entity tests to gauge your risk, which could lead to 3 years of free contracting.
IR35 case study - trying to renegotiate an agency contract
A contractor explains his frustrations at trying to negotiate a services based contract with an agency.
IR35 case study 1 - a contractors IR35 story
A contractor explains how he used a legal expert to get his contract passing IR35.
Contractors caught by IR35 who believe the agent was at fault have few grounds to sue
Contractors may blame their agent for landing them with a contract inside, but they have few legal options.
Contractor guide to IR35 case law
Case law is fundamental to the workings of the UK legal system and is often used to determine whether a contractor is inside or outside.
Contractor guide to Mutuality of obligation (MOO) and IR35
Mutuality of obligation is one of the key factors used by a court or tribunal to determine whether it applies and a contractor’s employment status.
What is the new Off-Payroll (IR35) tax?
Find out what the Off-Payroll tax is, how it affects you, and what you can do to prepare for the changes with this comprehensive guide.
Contractors assessed ‘inside IR35’ could claim rights under AWR, says lawyer
Contractors subject to blanket ‘inside IR35’ assessments have a strong case for rights under the Agency Workers Regulations, says Martyn Valentine.
Reducing the IR35 pain with a contractor pension
Reduce the pain of it by diverting your taxes into a pension and achieve up to 48% tax relief.
Umbrella companies and IR35
Explains whether it can be avoided using an umbrella scheme.
Dealing with multiple contracts being inside and outside IR35
Accounting requirements when you have contracts both inside and outside IR35.
Public sector contractors: 6 step plan to carry on working outside IR35
Follow this 6 step action plan to keep you operating outside IR35 by mitigating the impact of the public sector reforms.
How to avoid an IR35 investigation
Contractors can adopt a range of strategies to reduce the risk of an HMRC investigation.
What triggers an HMRC IR35 investigation?
Contractors will find that a range of factors could trigger an investigation, and the days of a random inspection are long gone.
Taxman’s tactics – what contractors should look out for when an IR35 investigation looms
You should avoid trying to deal with a tax inspection without the benefit of specialist help.
Contractor HMRC inspections: do you have your IR35 life raft ready?
All contractors are HMRC investigation targets but will have nothing to fear with good preparation.
Contractor appeals against HMRC IR35 rulings
Contractors who have been found by HMRC to fall foul and been presented with a large bill for back taxes can appeal to the tax tribunal.
IR35 and contracting: just why do cases take so long to be resolved?
You can be forced to endure years of stress before your case is resolved with HMRC.
Contractors who involve expert IR35 advisors can close down HMRC investigations early
Early intervention by expert advisors can prevent HMRC investigations turning into full blown status reviews.
IR35 reviews by HMRC: how they work
Undergoing a review by HMRC means facing a long, stressful investigation process.
IR35 compliance letters – contractor guidance on how to respond
Contractors receiving a new-style compliance letter from HMRC should only respond after seeking expert help.
Contractor guide to using the Taxpayers’ Charter during tax and IR35 investigations
Contractors can use the Taxpayers’ Charter to help during investigations if they believe HMRC has behaved badly.
IR35 taxes uncollectable if contractors’ company has no money
Contractors falling foul and whose company has no cash to pay any tax due to HMRC are safe from personal liability.
IR35 Court Cases: History of all cases and references to judgments
Interested in the IR35 court cases? Find here a list of all historic IR35 results and copies of the court judgments.
When should you start solving IR35? Now. Read these 3 essential tips
The time to statr preparing an IR35 defence is right now. Don't wait until it is too late. Find out what you need to do
IR35 history & overview
A timeline and oveview of the legislation since it was introduced in April 2000.
What is IR35? Does it apply to your contract?
It is tax avoidance legislation designed to ensure workers using an intermediary but who are ‘disguised employees’ pay the correct amount of tax.
What is a disguised employee?
Limited company contractors will find themselves labelled as ‘disguised employees’ and caught if they pass the tests of employment.
How to pass IR35 and save thousands by convincing clients to allow substitution
An exercised right of substitution (RoS) clause is the IR35 silver bullet you need to pass IR35. Here's how to get clients to allow it.
Using a right of substitution in contracts will help prove outside IR35 status
A valid right of substitution clause in contracts is a great defence of your outside IR35 status
Put yourself outside IR35 by bringing in expert help
Contractors can apply simple strategies to add weight to their status by employing expert sub-contractors to work on their contracts.
IR35 and substitution: substituting twice a year could save contractors thousands
Mounting evidence suggests that a contractor’s genuine right of substitution, if exercised, is the key status factor outweighing all others.
Contractors can avoid IR35 by using substitutes, subcontractors and helpers
You can use other workers to help fulfil contracts and thereby prove those contracts are outside.
If my client lets me substitute purely for IR35, would it count?
Using a substitute means you could enjoy 3 years of contracting, according to HMRC’s business entity tests.
Contractor guide to using substitution to stay outside IR35
If you are able to make unfettered substitutions you can use substitution to stay outside.
Why can't I use the company canteen?
Contractors can't expect to use the company canteen or to enjoy other employee rights because they risk falling inside.
Contractors must not be 'part and parcel' of clients to avoid IR35
One of the tests used to prove employment status is being 'part and parcel' of an organisation. You should avoid this at all cost.
Being "in business on your own account" is key for contractors to stay outside IR35
If you are able to show you are in business on your own account you are on your way to staying outside. The objective is to prove you are not 'part and parcel'.
6 essential steps to get your contract outside IR35 and save tax
Follow these simple steps to ensure that your contract does not fall foul of the IR35 rules and save thousands of pounds in tax bills.
Advice on buying an IR35 free contract
Is it worth spending money on buying an 'IR35 Free Contract' ?
IR35 legal dangers of the standard agency contract
The IR35 danger with the standard agency contract explained - what to look out for.
Negotiating your contract for IR35 compliance
If you have been offered a contract which is caught, or are in a contract that is caught you’ll need to consider negotiating changes to get it outside. We explain how.
IR35 contracts, agencies and issues
Examination of the grey areas between client, agent and contractor.
Can I change contract terms to be outside IR35 during a contract?
Is it possible to change contract terms to position yourself IR35 during an existing contract? The issues explored
IR35 and contracts - How to spot a badly worded one
Learn the issues to look for in your contract that could spell IR35 disaster - and how to avoid them.
What contractors need to know about IR35 compliant contracts
Contractors need to understand that no contract can in itself remove the threat of investigation from the Revenue.
Contractors need the IR35 confirmation letter
Getting a confirmation of terms letter from the client could save you endless trouble and expense if you need to prove that you are outside.
IR35 danger: when your contract is different from the agency-client contract
HMRC always obtains the agency-client contract and compares it with the contractor contract. They rarely agree, and this spells trouble.
Contracts alone won’t protect contractors from IR35
A contract between a contractor and a client is not necessarily a defence against a determined HMRC IR35 investigation.
The 5 step IR35 defence before signing the contract
Follow these 5 easy steps before signing and starting your contract to ensure IR35 does not apply to you.
IR35 Explained: ‘Contract of service’ and ‘contract for services’
In addition to defining employment status, contracts ‘of service’ and ‘for services’ bring rights and responsibilities for contractors and employees.
Contractors staying outside IR35: setting expectations with a letter to the client
A contractor’s covering letter sent with a confirmation of arrangements to a client manages expectations.
Contracting termination clauses that avoid IR35 risk
The termination clause in a contract can result in a ruling going either way.
Covering letters persuading clients to sign an IR35 confirmation of arrangements
Contractors facing challenges securing a signed confirmation of arrangements from a client may find a well-structured covering letter does the job.
IR35 negotiations - use employment rights to gain client cooperation
Contractors can use the threat of claiming employment rights as a bargaining chip with clients following two key rulings, says Andy Vessey of Qdos.
IR35 and contractual paperwork: How important is it really?
Is your contract worth the paper it’s written on when it comes to an IR35 investigation? Yes is the answer. Find out why.
Contractor guide to the UK public sector off-payroll rules
From September 2012 contractors with public sector contracts may have to demonstrate to their clients that the off-payroll rules don’t apply to them.
Public sector contractors – 11 ways to commit IR35 suicide
Here are 11 things you must avoid if you want to stay outside IR35. Whatever you do, don’t ignore them!
IR35Shield.co.uk vs HMRC CEST tool: How our tool can help everyone beat IR35
Keeping contractors outside IR35 is key to keeping their skills in the public sector. Find out how you can do exactly that with our IR35 shield tool.
How HR advisors can help clients with Off-Payroll IR35 rules – 7 simple steps
HR advisors will be vital in ensuring their clients navigate successfully the risks posed by the Off-Payroll IR35 rules. Find out how to do so, here.
Should contractors inside IR35 have employment rights?
Contractors caught by the legislation are taxed like employees, yet they have no employee rights unless they go to court to claim them. An unfair situation that the Government should resolve.
Why contractors caught by IR35 cannot necessarily claim employment rights
Roger Sinclair of Egos dashes the hopes of contractors caught by it claiming employment rights from their clients.
What is a ‘dependent contractor’? – The Taylor Review
The Taylor Review proposes the introduction of a ‘dependent contractor’. Find out what this means and how else the Review could affect contracting.
Can I get financial protection against an IR35 investigation?
How can a contractor protect themselves financially against an investigation.
IR35 insurance – cover yourself with contractors’ tax investigation cover
Contractors investing in insurance are buying peace of mind. Or are they? Not all policies are what they seem, so check the small print.
Under the bonnet of the HMRC IR35 tool
A detailed examination of the underlying design and code structure of HMRC’s IR35 tool reveals multiple glaring issues. Take a look under the bonnet.
IR35Shield.co.uk vs HMRC CEST tool: How our tool can help everyone beat IR35
Keeping contractors outside IR35 is key to keeping their skills in the public sector. Find out how you can do exactly that with our IR35 shield tool.
Off-Payroll audit guide: A timeline for agencies and hirers to achieve compliance
The Off-Payroll rules may not be implemented until April 2021, but hiring firms and recruitment agencies need to begin preparations now. Find out why.
Off-Payroll audit guide: Understanding contractor operating structures
An understanding of contractor operating structures is essential for achieving Off-Payroll compliance and avoiding unnecessary administration.
Off-Payroll audit guide: How to identify and address IR35 risk before April 2021
An early evaluation of your contingent workforce is needed to help identify and address common IR35 risk factors in advance of April 2021.
Off-Payroll audit guide: How to avoid IR35 compliance risks in the supply chain
Hiring firms and recruiters must take careful measures to negate tax liability risk resulting from the Off-Payroll (IR35) debt transfer provisions.
Off-Payroll audit guide: How to calculate and budget for the real cost of Off-Payroll
The financial impact of the Off-Payroll rules stretches far beyond employment tax liability. Find out how to calculate, and mitigate, the true cost.
Off-Payroll audit guide: How to use assessments to identify working practice pitfalls
Find out how contractor clients can harness IR35 assessments to mitigate IR35 risk by identifying and addressing common working practice pitfalls.
Off-Payroll audit guide: How to engage contractors after April 2021
The Off-Payroll rules impose a host of factors for clients to consider when selecting a contractor engagement model. Find out the best option for you.
Off-Payroll audit guide: Why client and agency cooperation is key to compliance
Clients and recruitment partners need to work together to achieve compliance and avoid the financial and criminal risks posed by Off-Payroll.
Off-Payroll audit guide: How to manage your contractor workforce
How contractor clients manage their contingent workforce will have a crucial bearing on company performance in the wake of the Off-Payroll rules.
Off-Payroll audit guide: How to accurately assess status without IR35 expertise
The Off-Payroll rules require accurate IR35 assessments demonstrating ‘reasonable care’. Find out how to achieve this without becoming an IR35 expert.
Off-Payroll audit guide: How to avoid compliance complacency
Off-Payroll compliance doesn’t end with the contractor’s status determination. Find out how to avoid the potential pain of compliance complacency.
Off-Payroll audit guide: How to create an effective and accurate compliance strategy
Off-Payroll compliance is perfectly manageable when clients and their recruitment partners have an effective and accurate compliance strategy.
Off-payroll (IR35 Reform) plan to be scrapped – 10 essential facts
IR35 reforms to be repealed. Find out what this means, whether it will happen, and how you can prepare for April 2023.
IR35 Special Report - 10 years of IR35
ContractorCalculators special IR35 report, on the 10th anniversary of IR35. 10 years that shook and shaped the world of UK contractors
IR35 After 15 Years
History, analysis, and ultimate contractor guide to avoiding IR35.
The following organisations have specialist knowledge of IR35: