Who this guide is for
Contractors anywhere in the UK who work through their own limited company or another intermediary, and want to know who decides whether the off-payroll working rules (IR35) apply to a contract, what a Status Determination Statement must say, and how to disagree with a client's decision. The rules are the same in England, Wales, Scotland and Northern Ireland.
What this guide does not cover
- Whether you are a worker or self-employed for your rights at work, such as the minimum wage or holiday pay: use the worker status checker.
- Tax rates, Self Assessment, National Insurance rates, VAT and Making Tax Digital. This guide does not cover them: check GOV.UK or ask HMRC.
- The size limits that decide whether a client is small, HMRC enquiries into an IR35 decision, and penalties. This guide does not cover them: ask HMRC or a qualified tax adviser.
- A client who has not paid your invoice: use the small claims checker.
⚖ At a glance
- The off-payroll working rules (IR35) make sure a contractor who works through their own intermediary pays broadly the same Income Tax and National Insurance as an employee would.
- They apply if you would have been an employee if you were providing your services directly to the client.
- For a public sector client, or a medium or large client outside the public sector, the client decides and must give you a Status Determination Statement with its reasons.
- For a small client outside the public sector, your own intermediary (usually your limited company) decides.
- If you disagree with the client's decision, tell the client why. It must respond within 45 calendar days of getting your disagreement.
- IR35 is about tax. It does not decide your rights at work.
The questions that decide the answer
- Do you work through your own limited company or another intermediary, or are you employed by an umbrella company?
- Who is the client: a public sector body, or a business or charity? If it is outside the public sector, is it small, medium or large?
- Has the client given you a Status Determination Statement? What did it decide, and what reasons did it give?
- How does the work really happen, and what does your contract say? The test is whether you would have been an employee if you worked for the client directly.
- When did you get the decision, and when is the last payment for this contract due? That affects whether the client has to answer your disagreement.
"Do the IR35 rules apply to me?"
The rules can apply if you provide your services to a client through your own intermediary. That is usually a limited company, often called a personal service company (PSC). It can also be a partnership or another individual.
They apply if you would have been an employee if you were providing your services directly to that client.
The rules apply contract by contract. You may have some contracts that are inside the rules and some that are not. A contract can be written, verbal or implied.
The rules are unlikely to apply if you are employed by an umbrella company.
"Who decides whether I am inside or outside IR35?"
It depends on the client:
- A public sector client, such as a government department, a local authority, a school or university, or part of the NHS: the client decides, whatever its size.
- A medium or large client outside the public sector: the client decides. This has been the rule since 6 April 2021.
- A small client outside the public sector: the client does not decide. Your intermediary (usually your own limited company) decides whether the rules apply to each contract. The CEST tool can help.
If you are not sure whether a client outside the public sector is small, ask it. A small client must confirm its size if you ask.
"What is a Status Determination Statement?"
A Status Determination Statement (SDS) is the client's decision on whether you are employed for tax purposes on that contract. It must give the client's conclusion and the reasons for it. The client must give it to you and to the person or organisation it contracts with, such as an agency.
The client must take reasonable care when it makes its decision.
Until the client has told you and the business it contracts with its decision and the reasons for it, the client is responsible for deducting Income Tax and employee National Insurance and paying employer National Insurance.
"What happens if I am inside IR35?"
The deemed employer must deduct Income Tax and employee National Insurance from the fees paid to your intermediary. It must also pay employer National Insurance, and the Apprenticeship Levy if it applies, to HMRC. The deemed employer can be the client or an agency in the chain.
You get relief for the tax already paid when you take the money out of your limited company or other intermediary. You do not need to declare that income again.
The deemed employer does not deduct student or postgraduate loan repayments. You must register for Self Assessment and send a tax return to report and pay them.
Your status for tax can be different from your status for employment rights. Being inside IR35 does not settle your rights at work: use the worker status checker for those.
"I disagree with the client's decision"
A client that decides your status must have a process for considering your views if you disagree. Tell the client why you think its decision is wrong. You can do this in writing or verbally, and you can include the result from HMRC's Check Employment Status for Tax (CEST) tool. The client may ask you for more evidence.
The client must respond within 45 calendar days, starting on the day it gets your disagreement, not the day it issued the Status Determination Statement. It must either:
- tell you it has considered your points and its decision is correct, with its reasons; or
- withdraw its decision and give you a new Status Determination Statement, saying the date it applies from.
While the client considers your disagreement, it carries on applying the rules in line with its original decision.
If the client does not respond within 45 calendar days, it becomes the deemed employer for PAYE.
There is no limit on how many times you can disagree. But if you raise the same disagreement again with no new reasons or evidence, the client can stand by its answer.
If the client did not give you a Status Determination Statement, you can still tell it you disagree, but the 45-day time limit does not apply.
An agency that is not the deemed employer cannot use the client's disagreement process.
"Should I use the CEST tool?"
HMRC's Check Employment Status for Tax (CEST) tool gives HMRC's view of whether you are employed or self-employed for tax on a specific contract, and whether the IR35 rules apply. You can use it as a worker for each contract, including to check a decision a client has made.
HMRC will stand by the result as long as the information you give is accurate and the tool is used in line with HMRC's guidance. It will not stand by results from arrangements deliberately set up to get a particular outcome.
If your contract or the way you work changes significantly, HMRC will not stand by the old result: use the tool again.
The tool is anonymous and does not store your results. You can download or print a copy of your result.
"Someone has offered me a way around IR35"
Be careful. HMRC warns that some schemes wrongly claim to get around the off-payroll working rules. GOV.UK explains how to recognise tax avoidance schemes aimed at contractors and agency workers.
Deadlines you must meet
- The client must respond to your disagreement within 45 calendar days of getting it.
- The client only has to respond to a disagreement made before the final payment for that contract is made. Raise yours as early as you can.
Where to go for help
HMRC: guidance on the off-payroll working rules and the Check Employment Status for Tax (CEST) tool are on GOV.UK. If the CEST tool cannot give a result, call HMRC on 0300 123 2326.
A qualified tax adviser can also help.
Citizens Advice (England): 0800 144 8848
Citizens Advice (Wales): 0800 702 2020
Citizens Advice Scotland: 0800 028 1456
Advice NI: 0800 915 4604
Traps
- A small client outside the public sector does not decide your status. Your own intermediary does.
- The 45 days run from when the client gets your disagreement, not from when it issued its decision.
- Tax keeps being dealt with in line with the original decision while the client considers your disagreement.
- Each contract is looked at separately. A new contract, or a significant change in how you work, can change the answer.
- IR35 decides how you are taxed, not whether you are a worker or employee for your rights at work.
- Schemes that claim to get around the rules may be tax avoidance.
📜 Sources (checked 25 September 2026)
- GOV.UK (HMRC): Understanding off-payroll working (IR35), last updated 26 February 2026 (who the rules apply to; PSC, partnership or another individual; client decides in most cases, the worker's intermediary decides for a small client outside the public sector; unlikely to apply to umbrella company employees; contract by contract, written, verbal or implied; SDS with reasons; deemed employer deducts Income Tax and employee NICs and pays employer NICs and Apprenticeship Levy; no student or postgraduate loan deductions, Self Assessment instead; tax avoidance schemes) - checked 25 September 2026.
- GOV.UK: Off-payroll working rules for clients (small client must confirm its size if asked; rules apply to all public authorities; SDS passed to the worker and the person contracted with, conclusion and reasons, reasonable care; client responsible for tax until it gives the determination and reasons; respond within 45 days and keep applying the original determination meanwhile; process to consider disagreements). Off-payroll working for intermediaries and contractors providing services to the public sector or medium and large clients. GOV.UK factsheet for contractors (relief on tax paid when withdrawing off-payroll income; no need to declare it again).
- HMRC Employment Status Manual ESM10015 and ESM10015A (client-led status disagreement process: 45 calendar days from receipt; verbal or written; confirm with reasons or withdraw and issue a new SDS with its date; CEST output may be included; no SDS means no 45-day limit; no cap on disagreements; repeat with no new reasons can be stood by; response needed only before the final chain payment; an agency that is not the deemed employer cannot use the process); rules from 6 April 2021. GOV.UK Help to comply (GfC4) client-led disagreement process: a client that fails to respond within 45 calendar days becomes the deemed employer for PAYE.
- GOV.UK Check employment status for tax (CEST) and HMRC ESM11010 / ESM11170 (HMRC stands by results if information accurate and used per guidance; not contrived arrangements; material changes mean run it again; anonymous, no stored results; download or print; helpline 0300 123 2326 where no determination; qualified tax advisers). CEST usage data (workers may use it per engagement and to check a hirer's determination).
- nibusinessinfo.co.uk (Off-payroll working (IR35): points Northern Ireland businesses to the same HMRC guidance) - the rules apply UK-wide. Citizens Advice and Advice NI numbers as verified for earlier UK Work Rights guides (24-25 September 2026).