What is IR35?

IR35 is a set of tax rules introduced by the UK government in 2000 to determine whether a contractor is genuinely self-employed or working as a "disguised employee." The goal of IR35 is to ensure that individuals who work like employees but operate through a limited company (often called a "personal service company" or PSC) pay the same tax and National Insurance contributions (NICs) as regular employees.

If it is deemed that you are working inside IR35 the only option, then you must be engaged as an 'employee'. You can continue to use a limited company and be paid into your business bank account but with employment deductions. You won't however receive any of the benefits like sick pay.

A better solution could be to use a specialist umbrella payroll company like Clipper Contracting Group; you can consolidate all of your assignments under the one employer yet actually get access to all the benefits of being an employee.

Updated on: 28/05/2025