IR35

The legislation simplified.

Understanding IR35

IR35 is UK tax legislation designed to ensure that individuals working like employees pay broadly the same tax as employees, even if they operate through an intermediary such as a limited company or umbrella company.

It primarily applies to contractors and off-payroll workers who provide services to a client but are not directly employed by them.

What is IR35?

IR35, also known as the off-payroll working rules, was introduced to address “disguised employment.”

This is where a worker operates through an intermediary—typically a limited company—but would be considered an employee if that intermediary did not exist.

In these cases, HMRC requires that the correct Income Tax and National Insurance contributions are paid, aligning more closely with standard employment.

Who Does IR35 Apply To?

IR35 typically applies to:

  • Contractors working through a limited company (PSC)

  • Freelancers providing services to businesses

  • Workers engaged via agencies or intermediaries

  • Individuals operating in the gig economy