Guidance

Understanding off-payroll working (IR35)

Off-payroll working rules for clients, workers (contractors) and their intermediaries.

The off-payroll working rules

The off-payroll working rules can apply if a worker (sometimes known as a contractor) provides their services through their own limited company or another type of intermediary to the client.

An intermediary will usually be the worker’s own personal service company, but could also be any of the following:

  • a partnership
  • a personal service company
  • an individual

The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same Income Tax and National Insurance contributions as employees. These rules are sometimes known as ‘IR35’.

The client is the organisation who is or will be receiving the services of a contractor. They may also be known as the engager, hirer or end client.

From 6 April 2017

Public authorities became responsible for deciding if the rules applied where they contracted workers who provide services through their own intermediary.

From 6 April 2021

All public authorities and medium and large-sized clients outside the public sector are responsible for deciding if the rules apply.

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.

Get help on the off-payroll working rules (IR35) with webinars, guidance and resources from HMRC.

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.

Who the rules apply to

You may be affected by these rules if you are:

  • a worker who provides their services through their intermediary
  • a client who receives services from a worker through their intermediary
  • an agency providing workers’ services through their intermediary

If the rules apply, Income Tax and employee National Insurance contributions must be deducted from fees and paid to HMRC. In addition, employer National Insurance contributions and Apprenticeship Levy, if applicable, must be paid to HMRC by the person who pays the worker’s intermediary.

You can use the Check Employment Status for Tax service to help you decide if the off-payroll working rules apply.

An individual’s employment status for tax determines the taxes the worker and client, or the person paying the worker’s intermediary need to pay, depending on whether a worker is employed or self-employed.

When the rules apply

The rules apply if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly.

A contract for the purpose of the off-payroll working rules is a written, verbal or implied agreement between parties.

The off-payroll working rules apply on a contract-by-contract basis. A worker may have some contracts which fall within the off-payroll working rules and some which do not.

Published 22 August 2019
Last updated 18 May 2021 + show all updates
  1. The guidance has been updated to reflect that the off-payroll working rules changed from 6 April 2021.

  2. Information about a delay due to the coronavirus (COVID-19) pandemic removed.

  3. This page has been updated to reflect the delay to the changes to the off-payroll working rules until 6 April 2021.

  4. Information about Help and support for off-payroll working webinars has been added.

  5. The guidance has been updated with information about tax avoidance schemes aimed at contractors and agency workers that wrongly claim to get around the off-payroll working rules.

  6. First published.