IR35 Rules: Amendment to Financial Threshold for “Small” Company

There has recently been an amendment to the IR35 Rules. The effect of the change is to increase the financial thresholds governing whether or not a client company engaging a freelancer working through a personal service company (“PSC”) is a “small” entity for IR35 purposes.

If the client is below those thresholds, it will be deemed to be “small”. If it is “small”, it does not have the legal obligation to determine the freelancer’s status for IR35 purposes. 

The Guidance Notes on Employment, Self-Employment, and IR35 have recently been updated. In particular, Section C, paragraph 3 of the updated version sets out details of the current and increased thresholds, and how and when the new increased thresholds apply. 

It is recommend that you read the Guidance Notes on Employment, Self-Employment and IR35 for full details of the IR35 rules, and the law and practice relating to employment, self-employment, and use of PSCs. You may also find it useful to review the accompanying Employment, Self-employment and IR35 Checklists and the IR35 Status Determination Statement .

The IR35, Employment and Self-Employment information pages provide further details about IR35 and links to template agreements for use when engaging freelancers.