IR35
IR35 is the UK tax legislation that decides whether a contractor working through their own limited company should be taxed like an employee of the client. Public sector and medium or large private sector clients make that decision; for small clients the contractor's company still does.
IR35 is the common name for two sets of rules in the Income Tax (Earnings and Pensions) Act 2003. Chapter 8, the original intermediaries legislation, puts the decision and the tax on the contractor's own company. Chapter 10, the off-payroll working rules, moves the decision to the client and the tax to whoever pays the contractor's company. Chapter 10 has applied to public sector clients since April 2017 and to medium and large private and voluntary sector clients since 6 April 2021.
The underlying question is the same under both: if the contractor's company were removed from the chain, would the contractor be an employee of the client? Control, substitution, the obligations each side owes the other and how far the contractor is part of the client's organisation decide it, engagement by engagement. Inside means the payments to the contractor's company are treated as employment income for tax and National Insurance. Outside means the company is paid gross and deals with its own tax.
Whether a private client is small is a Companies Act test. A client is medium or large if it meets two or more of these for two consecutive financial years: turnover over £15 million, balance sheet total over £7.5 million, more than 50 employees. Those turnover and balance sheet figures replaced £10.2 million and £5.1 million from 6 April 2025, but HMRC's guidance says the earliest tax year the change can move a client into the small category is 2027/28. Until a client has moved, an agency should assume the client decides, and ask it to confirm its size.
For an agency the risk is procedural as much as legal. Where the client decides, it must issue a status determination statement with reasons, and each agency in the chain must pass it on; an agency that does not becomes liable for the tax itself. Advertising a role as outside IR35 is not a determination. Status is also not fixed: a contract that starts outside and drifts into managing the client's staff, or is extended into a different role, may need a fresh look. Where the answer for a particular engagement is unclear, take advice rather than relying on a rate card.
How Vayora handles it
Vayora records IR35 on a role as TBD, inside, outside or out of scope, and holds each contractor's own preference, so contract searches can filter on both. That is a label, not a determination. Vayora does not assess status, does not track a status determination statement as its own record, and does not change how a contractor is paid based on the label: self-bills to a contractor's company are drawn gross from the signed pay rate, so an inside engagement where you are the fee-payer needs a payroll outside Vayora.
The platformThe longer answer: PSC or umbrella: how are contractors engaged in the UK?