IR35 FAQ
Common questions about IR35, the off-payroll rules, and how IR35.fyi works.
What is IR35?
IR35 is UK tax legislation introduced in 2000 (and updated in 2017 and 2021) that determines whether a contractor working through a limited company should be taxed as an employee. If HMRC decides a contractor is "inside IR35", they must pay Income Tax and National Insurance Contributions at employment rates, similar to an employee - but without employment rights.
What changed in April 2026?
The small company thresholds for the off-payroll working rules increased on 6 April 2026. A client is now "medium or large" (and therefore responsible for issuing the Status Determination Statement) only if it meets at least two of: turnover over £15m, balance sheet over £7.5m, more than 50 employees. This reclassified approximately 14,000 businesses as small, shifting IR35 responsibility back to the contractor's PSC for those engagements.
What is a Status Determination Statement (SDS)?
An SDS is the formal document a client or agency must issue to a contractor when they have determined IR35 status. It must state the determination (inside or outside IR35), give reasons, and explain how the decision was reached. Clients who fail to issue a valid SDS become liable for the tax.
What is PGMOL and why does it matter?
PGMOL v HMRC [2024] UKSC 29 is a Supreme Court ruling from July 2024 that clarified how employment status is assessed. It confirmed that Mutuality of Obligation (MOO) is primarily a threshold test (does a contract exist?), not a free-standing status indicator. The critical analysis now happens at stage 3 of the Ready Mixed Concrete test - the "wider picture" of the relationship. Post-PGMOL, Business on Own Account (BOOA) factors have become more decisive.
How is IR35.fyi different from HMRC's CEST tool?
HMRC's CEST tool uses a scoring algorithm that was last updated in 2019. It ignores Business on Own Account entirely, applies outdated MOO logic (contradicted by PGMOL), doesn't account for the April 2026 threshold changes, and produces binary results with no reasoning. IR35.fyi uses the Anthropic AI to apply a holistic, case-law-based assessment and gives you explanations, risk flags, and practical suggestions.
Is this legal advice?
No. IR35.fyi provides general guidance only and does not constitute legal or tax advice. Employment status is ultimately determined by HMRC and the courts based on the full facts of each engagement. For high-value or long-running engagements, we strongly recommend a professional review from a qualified IR35 specialist or employment law adviser.
What is the substitution test?
The right of substitution - your ability to send a qualified substitute to do the work in your place - is the single strongest outside-IR35 indicator. An unfettered right to substitute directly undermines the "personal service" requirement of the Ready Mixed Concrete test. For it to carry weight, the right must be genuine (not just a paper clause), and you should bear the cost of finding and paying the substitute.
Can I use this assessment for compliance purposes?
The assessment can inform your own IR35 determination and is useful for identifying risks and drafting a Status Determination Statement, but it is not a substitute for professional advice. For a formal SDS, particularly for medium and large clients, we recommend also taking professional advice from a qualified IR35 specialist.