IR35 (off-payroll working)

How the rules allocate responsibility

For public sector bodies and medium or large private-sector clients, the client must assess each personal-service-company engagement and issue a status determination statement with reasoned conclusions; the fee-payer then operates PAYE and National Insurance if the engagement is inside IR35. Small private-sector companies are exempt, which pushes the assessment (and the risk) back onto the contractor's own company under the original rules.

What decides inside versus outside

The same factors employment status has always turned on: personal service versus a genuine right of substitution, the degree of control over how, when and where the work is done, and mutuality of obligation. Contract wording helps only where reality matches it; tribunals read the actual working arrangement. Blanket "everyone inside" determinations avoid tax risk by creating recruitment risk, because genuinely independent contractors walk to clients who assess properly.

The 2026-27 wrinkle

The Companies Act size thresholds that define "small" rose in 2025 (turnover to £15m, balance sheet to £7.5m), and because off-payroll size is tested on prior financial years, the practical effect arrives from April 2027: a band of mid-sized clients will drop out of scope and their contractors resume self-assessment. Nothing changes operationally in July 2026, but engagement policies written for 2026 should already say what happens when the exemption lands.