Glossary · UK
What is IR35 (Off-Payroll Working)?
Tax rules to ensure contractors working like employees pay similar tax to employees.
Full Definition
IR35 (also called Off-Payroll Working) is a set of HMRC rules introduced in 2000 to stop disguised employment via personal service companies (PSCs). Since 2021, medium/large private-sector clients (and all public sector since 2017) must determine each contractor's IR35 status. If the contract is "inside IR35", the engager deducts PAYE tax and NI as if the contractor were an employee. "Outside IR35" contractors can take dividends and benefit from corporate tax structuring. The CEST tool (gov.uk) helps assess status, but is widely criticised. Disputes often go to tribunal.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.