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Use this IR35 calculator to see the take home pay differences between three different contractor income scenarios including Umbrella Company, Limited Company Outside IR35 and Limited Company Inside IR35.
- Overview
- The off-payroll working rules
- Who the rules apply to
- When the rules apply
- Working through an umbrella company
- What happens if the rules apply
- Tax avoidance schemes
- Get more help
Off-payroll working rules for clients, workers (contractors) and their intermediaries.
The off-payroll working rules make sure that a worker (sometimes known as a contractor) pays broadly the same Income Tax and National Insurance as an employee would.
The rules apply if the worker who provides services to a client through their own intermediary would have been an employee if they were providing their services directly to that client.
You may be affected by these rules if you are:
•a worker who provides their services through their own intermediary to a client
•a client who receives services from a worker through their intermediary
•an agency or other supplier providing workers’ services through their intermediary
There are different rules that apply to those working for a small business and those working for mid or large-sized businesses.
The client is the person who is or will be receiving the services of a worker. They may also be known as the engager, hirer or end client.
The off-payroll working rules apply if a worker provides their services through their own intermediary (usually a limited company, often known as a PSC).
The person responsible for determining whether the worker is employed for tax purposes, depends on if the client is:
•in the public sector
•in the private and voluntary sectors
•is a small business
In most cases, the client will be responsible for determining the employment status of the worker. However, if a worker provides services to a small client outside the public sector, the worker’s intermediary is responsible for deciding the worker’s employment status and if the rules apply.
The off-payroll working rules are unlikely to apply if you are employed by an umbrella company.
Find out what umbrella companies are and what they mean for you.
The party responsible for applying the rules must determine whether the worker is employed for tax purposes. You can use the check employment status for tax (CEST) tool to help you make this determination.
A worker’s employment status for tax determines the taxes the worker and the deemed employer need to pay, depending on whether a worker is determined as employed or self-employed.
The off-payroll working rules apply on a contract-by-contract basis. A worker may have some contracts which are within the off-payroll working rules and some which are not. A contract for the purpose of the off-payroll working rules is a written, verbal, or implied agreement between parties.
If the rules apply, the client is responsible for determining the worker’s employment status for tax, and they should produce a status determination statement (SDS) including the reasons for their determination.
You may be offered schemes that wrongly claim to get around the off-payroll working rules. Find out how to recognise tax avoidance schemes aimed at contractors and agency workers.
You can get help on the off-payroll working rules (IR35) with webinars and resources from HMRC.
You can also find advice on good practice when operating the off-payroll working rules, in Help to comply with the reformed off-payroll working rules (IR35) — GfC4.
You can contact HMRC for help with enquiries about the off-payroll working rules or a full run-through of the check employment status for tax (CEST) tool.
Published 22 August 2019
Last updated 15 December 2023 + show all updates
1.15 December 2023
IR35 Taxes Calculator. Calculate how much more tax you will have to pay if you’re caught by IR35. Use this calculator to work out your additional tax burden if your contract is inside IR35.
Find out how much more tax you will pay if your contract work is caught by the IR35 legislation with our IR35 calculator.
Feb 26, 2023 · What is IR35 and Off Payroll, exactly? And how much tax will you pay if you are caught? In our simple guide to IR35, we explain everything!
Apr 6, 2017 · Use this service to estimate how much Income Tax and National Insurance you should pay for the current tax year (6 April 2024 to 5 April 2025).
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Jan 24, 2024 · This factsheet provides an overview of off-payroll working rules, the tribunals process and links to further help and support. From: HM Revenue & Customs.
