IR35 in 2026: a contractor's plain-English guide

If your contract genuinely reflects self-employment (control, substitution, mutuality of obligation), you're outside IR35 and tax-efficient. If you're effectively a 'disguised employee', you're inside — and PAYE and NICs apply.

For public authorities and medium or large private-sector clients, the client generally determines status and should issue a Status Determination Statement. Different rules apply when the private-sector client qualifies as small. Company-size thresholds and the years used to test them can change, so check current HMRC guidance. CEST is HMRC's tool, but its answer depends on accurate facts.

Negotiate your day rate up to compensate, consider an umbrella PAYE arrangement, or look for outside-IR35 contracts. A specialist contractor accountant can model the take-home difference for each option.