IR35: what is IR35, what is IR35 UK, IR35 meaning and IR35 explained, from the off-payroll rules themselves to what inside IR35 and outside IR35 leave in your account

The IR35 pages on this site

• IR35 rules
• Inside IR35
• Outside IR35
• Inside vs outside IR35
• IR35 calculator
• IR35 check and CEST
• Contractor take-home
• Day rate calculator
• Trade day rates
• Contract salary figures
• IR35 news and changes

How the off-payroll rules decide what you are paid

1. The test is what the engagement looks like, not what the contract says. GOV.UK puts it plainly: the rules apply if the worker providing services through their own intermediary would have been an employee had they provided those services directly to the client. Control, personal service and the reality of the working arrangement decide it, and a clause nobody follows carries no weight.
2. Who decides depends on the size of the client. The guidance sets out different rules for those working for a small business and those working for mid or large-sized businesses. Where the client is medium or large, the client determines the status and should produce a status determination statement giving the reasons; where the client is small, the responsibility for applying the original rules stays with the worker's own company.
3. Inside means a deemed employer runs the deductions. If the worker is deemed employed for tax purposes, the deemed employer deducts Income Tax and employee National Insurance from the fees paid to the intermediary, and pays employer National Insurance and the Apprenticeship Levy where it applies. That is why an inside rate and an employee salary are not the same number.
4. Student loan repayments are the exception, and they surprise people. GOV.UK states that deemed employers do not deduct student or postgraduate loan repayments from the fees paid to an off-payroll worker: the worker registers for Self Assessment and reports and pays those repayments themselves. A contractor who budgets from a deemed-employment payslip alone will be short.
5. Outside means your company is paid gross and you decide the route. Outside the rules, the fee reaches your company and the take-home depends on how you draw it: salary, dividends, pension contributions and allowable costs. That is the calculation the outside calculator on this site performs, and it is where the difference between the two statuses becomes a figure.
6. Umbrella is a third route, and it is employment. Working through an umbrella company means being employed by the umbrella, so the deductions are PAYE deductions and the assignment rate you were quoted has to carry the employer costs before your gross pay is set. Comparing an umbrella rate with a limited company rate without that step compares two different things.

Common questions

What is IR35 in plain terms?

A set of rules that ask whether you would have been an employee if you had contracted directly with the client rather than through your own company. If the answer is yes, the engagement is inside the rules and is taxed broadly like employment; if no, it is outside and your company is paid gross.

Who decides whether I am inside or outside?

For a medium or large client, the client does, and should give you a status determination statement with its reasons. For a small client, the older rules apply and your own company is responsible for deciding and accounting for the position.

Does being inside IR35 make me an employee?

Not for employment law. It makes you employed for TAX purposes on that engagement, so Income Tax and National Insurance are deducted, but it does not by itself bring holiday pay, sick pay or redundancy rights with it. That asymmetry is the part contractors find hardest to accept.

What should I do when I get a determination I disagree with?

Ask the client for the statement and its reasons in writing, read them against how the engagement actually works, and use the client's disagreement process. A blanket determination applied to a whole category of contractors is exactly the thing the reasons requirement exists to expose.

Take-home pay by jurisdiction

• Take-home pay in United Kingdom