IR35 in 2026: Where the UK Off-Payroll Rules Actually Sit Now
After the 2017 and 2021 reforms, the 2023 repeal that was un-repealed, and three years of tribunal decisions, IR35 in 2026 is more stable than it has been in a decade.
The UK's off-payroll working rules — known to everyone as IR35 — operate on a simple premise: if the worker would be an employee but for the intermediary (typically their personal service company), the engagement should be taxed as employment. Implementing that simple premise has taken HMRC and the courts twenty-five years and counting.
The two regimes in 2026
Whether IR35 applies, and who is responsible for assessing and accounting for tax, depends on the size of the client:
- Public sector and medium/large private sector clients — the client is responsible for assessing employment status, issuing a Status Determination Statement to the worker and the agency, and (where the rules apply) the fee-payer accounts for PAYE and NICs. This regime has been in force in the public sector since April 2017 and the private sector since April 2021.
- Small private-sector clients — meeting two of: annual turnover not more than £10.2M, balance sheet not more than £5.1M, average employees not more than 50. The worker's own personal service company assesses status under the original 2000 IR35 framework.
The HMRC guidance hub is the canonical reference; the Check Employment Status for Tax (CEST) tool is the official assessment instrument, though its determinations have been overturned often enough that most engagers run a secondary assessment via specialist tax counsel.
The 2023 repeal that did not happen
The Truss government's September 2022 mini-budget announced the repeal of the 2017/2021 reforms, returning responsibility for IR35 assessment to the worker's own PSC regardless of client size. The subsequent Sunak government reversed that announcement before any reform took effect. The current rules remain those introduced in 2017/2021.
The "set-off" provision (effective April 2024)
One of the most important operational changes lands in April 2024 and matters in 2026: when HMRC determines that an off-payroll engagement was wrongly assessed as outside IR35, the tax already paid by the contractor's PSC (corporation tax, dividend tax, employee NICs on salary) is set off against the PAYE/NICs liability of the deemed employer. Before this rule, the same income could effectively be taxed twice. The set-off does not eliminate engager exposure, but it significantly reduces the cash quantum.
What the tribunals have settled
Three patterns dominate recent appellate decisions:
- Mutuality of obligation — its presence is necessary for an employment relationship but its mere presence is not sufficient on its own
- Control — the right to direct what, when, and how is the strongest single indicator
- "In business on own account" — financial risk, equipment ownership, multiple concurrent clients, the ability to profit from sound management all weigh against employment
The HMRC v Atholl House Productions Court of Appeal decision (2022) and the PGMOL Supreme Court decision (2024) are the modern reference points. For broader UK employment-tax context, see our IR35 glossary entry and the independent contractor classification entry.