HMRC’s off-payroll working rules (commonly known as IR35) changed how contractors and clients must manage employment status assessments, placing new responsibilities on clients. The legislation applies to services provided by contractors who operate via a Personal Services Company (PSC).

For services taking place for medium and large clients after 6 April 2021, it is the client’s responsibility, rather than the PSC contractor’s, to determine IR35 status and ensure compliance. Are you an exempt client?

There are two main types of organisations that may be exempt from the off-payroll rules:

We have split this guide into three sections based on which rules govern your type of UK organisation. Select the section that applies to your organisation and follow the guidance to determine whether you may be exempt as a small business. Some of these rules include timeframes for when they apply, so please refer to the HMRC links and detailed guidance.

Companies Act businesses

This category covers the majority of hiring companies on the YunoJuno platform.

Non-Companies Act businesses

This category covers less common organisation types, such as non-Companies Act partnerships, sole traders, or charities.

Public authorities

This category covers organisations defined under Freedom of Information legislation.

If your business is any of the following:

then the Companies Act rules apply.

To qualify as small under the Small Companies Regime, the business must meet two or more of the following criteria:

If your company meets two or more of these criteria, it will qualify as a small business and will be exempt from the off-payroll IR35 rule changes.

Companies that do not qualify as small are classified as medium or large, and the off-payroll rules will apply. See the HMRC guidance for more information.

If the business is part of a group, the worldwide turnover, balance sheet totals, and number of employees of the group as a whole must be considered. See HMRC guidance for further details.

Some organisations cannot apply the Small Companies Regime under the Companies Act. Any organisation not permitted to file accounts under this regime will be treated as medium or large for IR35 purposes, meaning the off-payroll rules will apply.

If the organisation is not one of the Companies Act business types listed above (for example, a non-Companies Act partnership, a sole trader, or a charity), the Simplified Rules apply.

Under these rules, the organisation will be considered small, and therefore exempt from the off-payroll rules, only if its annual turnover is £15 million or less.

If turnover exceeds this amount, the organisation will be considered medium or large, and the off-payroll rules will apply.

Turnover is assessed using the last financial year ending at least nine months before the beginning of the tax year. Charities do not need to include donations when calculating turnover. See HMRC guidance for further information.

If the organisation is part of a group, the worldwide turnover, balance sheet totals, and employee numbers of the entire group must be used.

A public authority, as defined under Freedom of Information legislation, must always apply the off-payroll IR35 rules, regardless of size. See HMRC guidance for more information.

Your internal finance team or accountant will have records of your organisation’s type and size as part of your company accounts.

It is the client’s legal responsibility to determine whether their organisation qualifies as a small business and is therefore exempt from the off-payroll rules. Your internal finance team or accountant will be best placed to confirm this.