What is IR35 and how does it affect UK contractors?

IR35 is UK tax legislation (officially named the Intermediaries Legislation) that targets contractors who work like employees but operate through their own limited company to gain tax advantages. If you're deemed 'inside IR35', you'll pay similar taxes to an employee including PAYE and National Insurance deducted at source, reducing take-home pay by approximately 20-25%. If 'outside IR35', you retain contractor tax benefits including the ability to pay yourself through an optimal salary-dividend combination. The determination depends on three key factors: substitution (can you send someone else to do the work?), control (who decides how, when, and where work is done?), and mutuality of obligation (is there an ongoing commitment between you and the end client?). Since April 2021, private sector clients with over 50 employees must make the IR35 determination using a Status Determination Statement (SDS). Contractors working for smaller companies or public sector clients face different rules. Understanding your IR35 status before accepting contracts is crucial for accurate tax planning and avoiding unexpected tax bills.

IR35 refers to UK tax legislation that targets contractors who work like employees but operate through their own limited company to gain tax advantages. If you're 'inside IR35', you'll pay similar taxes to an employee. If 'outside IR35', you can retain contractor tax benefits. You can use HMRC's official Check Employment Status for Tax (CEST) tool for their determination.

How accurate is this IR35 checker?

Our checker is based on the same factors HMRC's CEST tool uses, but with clearer questions and more detailed guidance. It provides a useful indication of your status, but for a definitive answer you should get professional advice and potentially a formal status determination.

Who is responsible for determining IR35 status?

For private sector clients with over 50 employees, the end client must make the determination. For smaller private clients and all public sector clients, different rules apply. Our checker helps you understand your likely status before any formal determination.

What happens if I'm inside IR35?

If inside IR35, tax and National Insurance must be deducted at source, similar to an employee. This typically means taking home 20-25% less than an outside IR35 contract. You may want to review your working practices or contract terms.

Can I challenge an IR35 determination?

Yes, you can dispute a Status Determination Statement (SDS) within the client's disagreement process. Having evidence of your genuine working practices is essential. Our assessment helps identify the key factors that support your case.

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Answer a few questions about your working arrangement and get instant analysis of your likely IR35 status. Based on the same factors as HMRC's CEST tool.

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Key Factors We Assess

Substitution

Can you send a qualified substitute to do the work in your place?

Control

Who decides how, when, and where the work is carried out?

Mutuality of Obligation

Is there an ongoing commitment to provide or accept work?

Financial Risk

Do you bear financial risk for the work you do?

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Understanding Your IR35 Assessment

1Inside vs Outside IR35: Being 'inside IR35' means you're deemed an employee for tax purposes, with PAYE and National Insurance deducted at source by the fee payer. Your take-home pay reduces by approximately 20-25% compared to outside IR35. Being 'outside IR35' means you're treated as a genuine business, retaining contractor tax benefits including optimal salary-dividend extraction strategies, corporation tax relief on business expenses, and VAT flat rate scheme advantages. The difference in annual take-home on a £60,000 contract is approximately £12,000-£15,000.
2The Three Critical Factors: Substitution: genuine right to send a substitute without client approval strongly indicates outside IR35. Control: if you control how, when, and where work is done, this suggests outside IR35; if the client controls these aspects, it points inside. Mutuality of obligation: no ongoing obligation to provide or accept work supports outside IR35; continuous obligation suggests inside. These three factors carry the most weight in any determination. Secondary factors like financial risk, equipment provision, and integration into the client's business provide supporting evidence but rarely override the primary factors.
3Status Determination Statements (SDS): Since April 2021, private sector clients with over 50 employees must issue a Status Determination Statement before engagement begins. This written determination states whether the engagement is inside or outside IR35 and explains the reasons. You have the right to dispute the determination through the client's disagreement process. The client must respond within 45 days. If you disagree with the client's determination, gather evidence of your genuine working practices, contract terms, and the reality of your engagement. Professional advice from a specialist accountant strengthens your position in any dispute.
4Planning and Protection: Always assess IR35 status before accepting contracts. Factor the tax impact into your rate negotiations,inside IR35 contracts typically require 25-30% higher day rates to achieve equivalent take-home pay. Review contract terms and working practices regularly; changes in how you work can affect your status. Maintain evidence of your genuinely independent contractor status: separate business premises, multiple clients, professional indemnity insurance, your own equipment, marketing materials, and business development activities. This evidence proves invaluable if your status is ever challenged by HMRC or disputed with a client.

✓Verified by Alto's chartered accountants. Rates current for 2026/27 tax year.

Why Check Your IR35 Status?

Understanding where you stand helps you plan and protect your income

Tax Planning

Know your likely tax position before agreeing contracts. IR35 status can mean a 20-25% difference in take-home pay.

Contract Review

Identify contract terms that may need adjusting to better reflect your genuine working arrangement.

Dispute Preparation

If you disagree with a client's determination, understand which factors support your position.

Frequently Asked Questions

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Key Factors We Assess

Substitution

Control

Mutuality of Obligation

Financial Risk

Why Check Your IR35 Status?

Tax Planning

Contract Review

Dispute Preparation

Frequently Asked Questions

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Need a Professional IR35 Review?

Check Your IR35 Status

Key Factors We Assess

Substitution

Control

Mutuality of Obligation

Financial Risk

TL;DR

Why Check Your IR35 Status?

Tax Planning

Contract Review

Dispute Preparation

Frequently Asked Questions

What is IR35?

How accurate is this IR35 checker?

What factors determine IR35 status?

Who is responsible for determining IR35 status?

What happens if I'm inside IR35?

Can I challenge an IR35 determination?

Related Tools

Salary & Dividend Calculator

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Need a Professional IR35 Review?