1. Introduction
As of 6 April 2021, medium and large private-sector clients must decide each contractor’s IR35 status and issue a Status Determination Statement (SDS) with reasonable care, passing it to the worker and the next party in the chain. If the worker or deemed employer disagrees, you must run a client-led disagreement process and respond within 45 days.
2. Responsibilities & liability
Small-client exemption (thresholds uplifted)
Small private-sector clients remain exempt (the PSC decides). Monetary thresholds increased for financial years starting on/after 6 April 2025 (small = turnover ≤ £15m, balance sheet ≤ £7.5m, ≤ 50 employees). Because OPW uses the prior financial year to fix size for a tax year (and there’s a “two-year rule”), the uplift won’t usually affect OPW classification until April 2026 at the earliest, more often April 2027.
2024 ‘set-off’ (reduces double taxation on historic errors)
For assessments/settlements on or after 6 April 2024, HMRC can set off Income Tax/NICs (and, where relevant, corporation tax) already paid by the worker/PSC against the deemed employer’s PAYE bill for past non-compliance. (Employer’s NIC is not offset.)
Umbrella engagements & what’s next
Where a worker is employed by a compliant umbrella and paid via PAYE, the off-payroll rules are unlikely to apply to that engagement—standard supply-chain due diligence still matters. The government has published its consultation outcome and draft legislation to tighten the umbrella market, intended from 6 April 2026; we’ll update clients as this finalises.
3. Outside IR35: Working Practice
Compliant Status Determination Statements (SDS): Contractors assessed as ‘outside IR35’.
Statement of Work (SoW): The narrative description of a project’s work requirement. It defines project-specific activities, deliverables, and timelines for a vendor providing services to the client.
Contract for Services: A formal, legally binding agreement between a business and a self-employed individual.
Assessment & Insurance: Both a Contract for Services and a Statement of Work must be assessed and insured to ensure compliance and protection.
4. Inside IR35: Working Practice
A fully compliant approach covers everything from background checks and working rights through to Off-Payroll legislation, SDS communication, and contractors assessed as ‘inside IR35’.
PAYE: Similar to permanent employment in terms of tax, but without the associated benefits. A limited company set-up becomes redundant. Costs can be higher, as employer’s NIC and pension must be factored in. Contractors may request that any additional tax burden is covered through an uplift in their rate.
Fixed-Term Contract (FTC) / Umbrella: This option can work as a compromise between contract and permanent hire. However, it can be harder to attract resources willing to work in this way. It lacks the benefits of permanent roles, and does not usually offer the uplift seen in Limited Company contracting. It can be workable if the salary sits between a permanent package and a contractor rate. Under this scheme, individuals must work through a compliant umbrella company.
5. At Savant, We Offer Our Clients