How to Stay Outside IR35

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How to Stay Outside IR35

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IR35 Compliance and Risk Management

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What is IR35 and Why It Matters

IR35 is a UK tax law designed to ensure contractors pay the right taxes. It affects freelancers, businesses, and agencies. Understanding whether you're inside or outside IR35 is crucial to avoid unexpected tax bills and stay compliant with HMRC.


Originally introduced in 2000 by HMRC, IR35 targets "disguised employment" where individuals work like employees but exploit tax advantages through personal service companies (PSCs). Since then, significant reforms in 2017 for the public sector and 2021 for the private sector have shifted the responsibility onto clients to determine a contractor's status, making it more critical than ever to get it right.


The financial implications are significant: being inside IR35 means paying income tax and National Insurance contributions via PAYE, potentially reducing your take-home pay. Conversely, staying outside IR35 allows greater tax flexibility but requires careful contract structuring and working practices. Misjudging your status can lead to HMRC investigations, penalties, or backdated tax demands, which is why proactive understanding and compliance are essential.


Whether you're a contractor seeking to maximize earnings or a business managing a workforce, IR35 impacts your financial planning and legal obligations. Regular status reviews and professional advice can help mitigate risks and ensure you’re on the right side of the law.


IR35 RULES

Helpful Articles

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Contract structuring tips

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Can you claim expenses?

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What IR35 means 

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Preparing for an IR35 audit

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Small company exemption

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PAYE taxation

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IR35 RULES

IR35 Updates and News

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By Simon Poole June 10, 2025
Introduction: Understanding IR35 in Simple Terms IR35, officially known as the 'Intermediaries Legislation', is one of the most significant pieces of UK tax legislation affecting self-employed contractors and freelancers. Introduced in 2000, its primary aim is to tackle tax avoidance by identifying cases where workers provide services through an intermediary (typically a limited or personal service company) but operate in a way that closely resembles employment. This guide explains IR35 in plain English: what it is, why it exists, how it works, who decides your status, and what you can do to stay compliant.
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