IR35 Rules UK 2026: Complete Guide for Contractors
What is IR35?
IR35 (off-payroll working rules) determines whether you should pay tax as an employee or a contractor when working through your limited company.
- Inside IR35: You pay tax like an employee (PAYE + NI)
- Outside IR35: You pay corporation tax + dividend tax (usually lower)
💡 Quick Tip
Thistle tracks your IR35 status per contract and calculates the correct tax automatically.
Three Tests for IR35
- Control: Does the client control how, when, and where you work?
- Substitution: Can you send someone else to do the work?
- Mutuality of Obligation: Must the client provide work and must you accept it?
If you answer "yes" to all three, you're likely inside IR35.
Who Determines Status?
| Client Type | Who Decides |
|---|---|
| Public Sector | End client |
| Large/Medium Private | End client |
| Small Private (<50 staff) | You (contractor) |
IR35-Ready Accounting
Thistle handles both inside and outside IR35 contracts, calculating the right tax for each.
Start Free Trial →Frequently Asked Questions
What is IR35?
IR35 is tax legislation designed to combat tax avoidance by workers supplying services through an intermediary (usually a limited company) who would be employees if contracted directly.
Who determines IR35 status?
For public sector and large/medium private sector clients, the end client determines status. For small private sector clients, contractors self-assess.
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