Off-payroll

Being off-payroll means that you are paid for work by other means than a typical salary (also known as a payroll). Common examples of being off-payroll include freelance work or sub-contracting, so you would receive payment through an individual invoice, rather than being part of the company’s payroll. If you are working off-payroll for a client, or you hire contractors to work for your business, it’s crucial to understand the rules surrounding tax implications and IR35 to avoid potential penalties and legal issues.

What is IR35?

IR35 is a type of legislation that allows HMRC to collect additional taxes if they consider that a contractor/freelancer could be, in fact, a ‘disguised employee.’

The purpose of IR35 is basically to make companies pay the right amount of tax, such as Income Tax and National Insurance. Off-payroll contractors pay less NI than they would otherwise pay if they were employed by their clients. IR35 was introduced to stop both companies and contractors from exploiting this.

Off-payroll & IR35: What you need to know

Simply being off-payroll doesn’t mean that you’re not an employee. IR35 states that if you’re an off-payroll worker and  treated like an employee, your client must place you on the payroll. You then pay employment taxes for your work.

If you’re off-payroll and are unsure whether you’re a disguised employee for one of your clients, ask yourself:

  • Do you have to do the work personally, or can they send someone else instead?
  • Do you have to carry out any task that an employee would normally do?
  • Does your client get to decide how, when, and where you do the work?

If your answer to any of these questions is yes, then it’s likely you are a disguised employee in the eyes of HMRC.

Frequently Asked Questions

Search More Terms

News & Insights

6 days ago
National Insurance is changing. With the new tax year starting on 6th April 2025, there are some important changes to Na...
National Insurance is changing. With the new tax year starting on 6th April 2025, there are some important changes to National Insurance Contributions (NICs) that could affect your business. These updates will impact both employer...
3 months ago
Tax on Crypto Currency and Digital Assets is a rapidly evolving regulatory landscape. For cryptocurrency and digital ass...
Tax on Crypto Currency and Digital Assets is a rapidly evolving regulatory landscape. For cryptocurrency and digital assets in the UK, companies and individuals need to plan ahead to ensure compliance with their tax obligations. H...
4 months ago
The financial challenges of freelancing are often a burden most people don’t anticipate. Over the years, the prices ch...
The financial challenges of freelancing are often a burden most people don’t anticipate. Over the years, the prices charged are increasing faster than the personal tax rate bands. As a result of this, freelancers who would have ...
4 months ago
What are the VAT filing deadlines UK 2025, how do you prepare for VAT compliance and what is VAT? Value Added Tax (VAT) ...
What are the VAT filing deadlines UK 2025, how do you prepare for VAT compliance and what is VAT? Value Added Tax (VAT) is a tax added to goods and services sold by businesses that are registered for VAT. Businesses in the UK, hav...
5 months ago
Completing VAT returns can be challenging for small business owners, with substantial legislation and rules complicating...
Completing VAT returns can be challenging for small business owners, with substantial legislation and rules complicating matters further. It can be quite easy to make a mistake if you are not well versed in UK VAT legislation. At ...
5 months ago
Whether you are self-employed or run your own business, managing taxes can be daunting. Occasionally mistakes can happen...
Whether you are self-employed or run your own business, managing taxes can be daunting. Occasionally mistakes can happen, but fortunately HMRC allow you an opportunity to rectify any mistakes through a voluntary disclosure. This a...
5 months ago
Financial consulting services cover a range of advisory activities designed to help companies manage finances effectivel...
Financial consulting services cover a range of advisory activities designed to help companies manage finances effectively. An accountant can provide this, with the expertise and knowledge needed to help you manage finances. The pr...
5 months ago
UK tax on Instagram earnings is something most creators fail to account for. Instagram has become more than just a place...
UK tax on Instagram earnings is something most creators fail to account for. Instagram has become more than just a place to share videos. It’s an avenue for content creators to monetise their creativity. Whether you’re...

Subscribe Now

Receive our latest news & insights directly to your fingertips.