Clear guidance for contractors who want to understand IR35 status, working models and the questions worth asking before accepting an engagement.
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In this guide
IR35, also known as the off-payroll working rules, considers whether a contractor is genuinely self-employed or would be treated as an employee for tax purposes. An inside IR35 engagement is generally taxed through PAYE. An outside IR35 engagement may be delivered through your own limited company, subject to the facts of the working arrangement.
Inside IR35 usually means income tax and National Insurance are deducted through PAYE, often by an umbrella company. Outside IR35 indicates that the engagement reflects an independent business relationship. Status should not be judged from the role title alone, and a higher day rate does not automatically make one arrangement better than another.
The real working relationship matters as much as the written contract. Important factors include the client's level of control, whether a genuine right of substitution exists, mutuality of obligation, financial risk, equipment and whether the contractor operates as an independent business. The evidence needs to be considered together rather than as a simple keyword test.
Inside IR35 contractors often work through an umbrella company that employs them and operates PAYE. Outside IR35 engagements are commonly delivered through a contractor's limited company, bringing additional accounting and company responsibilities. The appropriate route depends on the engagement, its status and your circumstances.
Educational information only, not tax or legal advice. IR35 status depends on the specific facts of each engagement. For an official view, use HMRC's CEST service and consider professional advice.
