IR35 FAQ
What is IR35?
IR35, or off-payroll working rules, ensures that workers who look like employees and work through intermediaries (like Personal Service Companies, PSCs) pay similar taxes to employees. These rules were introduced in 2000 and were updated for the private sector on 6th April 2021.
What’s Changed?
The responsibility for assessing employment status now lies with the end client, who must determine whether IR35 applies.
What Do Clients Need to Do?
Clients must assess whether IR35 applies before engaging a contractor and provide a written Status Determination Statement (SDS) with the rationale for the decision. This must be shared with all parties in the supply chain, including CBSbutler.
Who Does It Affect?
Small companies (defined by the Companies Act 2006) are exempt. A company is considered small if it meets two of the following criteria: turnover ≤ £10.2m, balance sheet ≤ £5.1m, or ≤ 50 employees.
Does Working Remotely Affect My IR35 Status?
Yes, if you work through a UK PSC, the rules apply regardless of where the client is based.
What Is a PSC?
A PSC is a limited company that employs a representative to deliver services to an end client, typically owned by the representative with a material interest.
What Is an Umbrella Company?
An Umbrella Company employs contractors, handling taxes, National Insurance, and pension contributions, and pays the contractor after deductions.
What If My Assignment is Inside IR35?
You’ll be engaged on PAYE or through an Umbrella Company, where tax and National Insurance are deducted at source.
Can I Use My Own Umbrella Company?
CBSbutler partners with accredited providers for compliance:
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Paystream:
| new.business@paystream.co.uk | Paystream Website -
Brookson:
| Brookson Website -
Giant:
| Giant Website
Key IR35 Considerations:
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Control: If the client controls how and where the work is carried out, the role is likely Inside IR35.
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Substitution: If you can’t provide a substitute, it’s a strong indicator of Inside IR35.
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Mutuality of Obligation (MOO): If there’s an expectation of future work, it may indicate Inside IR35.
Status Determination Statement (SDS):
The SDS is issued by the client to confirm if IR35 applies, with reasons and the appeal process. It must be shared with CBSbutler and the contractor.
What if I Disagree with the SDS?
You can appeal if the SDS seems incorrect. The client must respond within 45 days, either confirming the determination or issuing a new SDS.
Inside IR35 and Pay:
If inside IR35, PAYE tax and NI are deducted. The client is not required to increase pay, but this can be discussed with your consultant.
Fixed-Term Contracts:
A fixed-term contract with an end client is an employment contract, offering employment benefits and direct payment from the client, managed through CBSbutler.
How Often Should I Have an IR35 Assessment?
Each new contract or significant changes to your role should trigger a new IR35 assessment.