IR35 explained: are you inside or outside?

IR35 determines whether a contractor working through their own limited company should be taxed broadly as an employee for that engagement, and getting the determination wrong carries real financial risk.

What 'inside' and 'outside' mean

Being 'inside IR35' means HMRC would consider the working relationship similar enough to employment that the engagement should be taxed accordingly, even though you're contracting through a company. 'Outside' means genuine self-employment status is recognised.

What determines status

Key factors include the level of control the client has over how work is done, whether you can send a substitute to do the work, and whether you carry genuine financial risk — not simply what the contract states.

Who makes the determination

For engagements with medium and large private sector clients, and public sector clients generally, the end client is usually responsible for the determination, not the contractor.

Our advice

We review contract terms and actual working practices for contractor clients, since the two don't always match — and a written contract alone won't protect an inside-IR35 reality.