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IR35 Regulations - What they are and who they apply to
IR35 Regulations - What they are and who they apply to
Rebecca Russell avatar
Written by Rebecca Russell
Updated over a week ago

What is IR35?

IR35 regulations are a set of regulations that focus on the taxation of workers who work for employers though an intermediary such a Personal Service Company (PSC).

First introduced in to the public sector in April 2000, the HMRC have now extended regulations to the private sector for contracts of work still in place on or after 6th April 2021.

IR35 was due to go live in April 2020 but was delayed due to the COVID-19 pandemic.

What the legislation states

If an individual who provides services to you via an intermediary (such as the individual's personal service company or a managed service) could be categorised as an employee if it wasn't for the intermediary, there may be additional requirements to deduct PAYE and National Insurance from the individual via the payroll.

This applies to all contracts still in place in the private sector as of 6th April 2021.

Who is impacted?

Companies who satisfy two of the following criteria will not be required to operate IR35 regulations:

  • Have 50 employees or less

  • Have a balance sheet of £5.1 million or less

  • Have an annual turn over of £10.2 million or less

If you have a partner company who does not satisfy two of these criteria, you will need to operate IR35 regulations.

IR35 regulations are centred around a "supply chain" and certain parties in the chain have certain duties that need to be fulfilled.

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