IR35 regulations focus on the taxation of workers who provide services through an intermediary, such as a Personal Service Company (PSC).
IR35 was first introduced into the public sector in April 2000 and the private sector in April 2021. These regulations also apply to those with ongoing contracts.
Purpose of IR35
IR35 aims to ensure that individuals who work like an employee, but through an intermediary (such as a personal service company) are taxed similarly to regular employees. This means deducting PAYE tax and national insurance from their pay, through the payroll.
Who needs to comply
Companies must operate under IR35 regulations unless they meet at least two of the following criteria:
Have 50 employees or fewer
Have a balance sheet total of £5.1 million or less
Have an annual turnover of £10.2 million or less
If a partner company doesn't satisfy two of these criteria, you'll need to operate under IR35 regulations.
IR35 regulations are centered around a "supply chain" where each party has certain duties to fulfill. For more information, please refer to our Help Centre article.