What IR35 is for
The rules look past the contract between two companies to the working relationship underneath it. If you would be an employee were it not for your company in the middle, the engagement is inside IR35 and the income is taxed much like a salary. If you are genuinely in business on your own account, it is outside.
Who makes the decision
| Your client | Who decides | What you get |
|---|---|---|
| Public sector body | The client | A Status Determination Statement |
| Medium or large private sector company | The client | A Status Determination Statement |
| Small private sector company | Your own company | No statement; you assess it yourself |
Clients have to confirm their size if you ask. When the client decides, it must give reasons in the Status Determination Statement, and you can disagree with it through the client’s dispute process.
What decides the answer
- Control: who decides how, when and where the work is done.
- Substitution: whether your company could genuinely send someone else to do it.
- Mutuality of obligation: whether the client must offer work and you must accept it.
- Financial risk and how far you work like a business with several clients.
HMRC’s Check Employment Status for Tax tool walks through these questions. Its answer is only as good as the facts entered, so the contract and the day-to-day reality both need to match.
If a contract is inside IR35
Where the client or agency decides, the fee is paid with tax and National Insurance already deducted, much like a payslip. Where your own company decides, it calculates a deemed payment at the end of the tax year. Either way, the usual mix of a small salary and dividends no longer works for that income, so pay planning changes.
We look at each new contract with you and tell you when the IR35 position needs a closer review before you start.
Frequently Asked Questions
Who decides IR35 status for my contract?
Public sector clients and medium or large private sector clients decide and issue a Status Determination Statement. For small private sector clients, your own limited company decides.
What is a Status Determination Statement?
The client’s written decision on whether the off-payroll rules apply, with its reasons. You can challenge it through the client’s dispute process.
Does IR35 apply in Ireland?
No. IR35 is a UK rule. Irish contractors face different questions, such as Professional Services Withholding Tax on certain payments.
Can I still pay myself dividends if I am inside IR35?
Income from an inside IR35 engagement is taxed like employment income, so the salary and dividend approach no longer reduces the tax on it.
Sources (2)Checked 29 October 2026
This guide is general information, not advice for your situation. Rules change, so check the official sources or talk to us before acting on it.