IR35 Rules

Are IR35 rules relevant to you?


You do not need to consider IR35 rules unless a PSC is involved so it is important to understand:

· that if you engage a freelancer directly (not through a PSC), IR35 cannot apply. However, if they are in law an employee (not a self-employed), you will have to operate PAYE; and

· what amounts to a PSC for the purposes of IR35. If a freelancer works through some other type of entity (e.g. an agency or managed service company), other rules will or might apply.

It can be difficult to decide whether someone is a “disguised employee”. HMCR’s view is not conclusive, but it provides a tool, the Check Employment Status Tool (“CEST”) that you can use to assess employment status. For more detail, please read our Guidance Note (which you can see here).

These information pages relate only to IR35 and PSCs: if you are looking at a managed service company (“MSC”), a composite service company, an employment agency or an employment business, you should take legal advice and guidance about tax, legal and other issues relevant to them.

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