IR35 compliance checklist for UK small businesses.
The off-payroll working rules (IR35) decide who's responsible for a contractor's tax status - your business, or the contractor themselves. The thresholds that decide which rules apply to you are changing from April 2026. Here's what's actually different, and what to check on every contractor engagement either way.
What's actually changing on 6 April 2026
The off-payroll working rules only put the burden of deciding a contractor's employment status on YOU (the "end client") if your business doesn't count as "small" under the Companies Act 2006. From 6 April 2026, two of the three small-company thresholds are rising - which moves roughly 14,000 companies from "medium" into "small."
| Threshold | Current | From 6 April 2026 |
|---|---|---|
| Annual turnover | £10.2m | £15m |
| Balance sheet total | £5.1m | £7.5m |
| Average monthly employees | 50 | 50 (unchanged) |
You need to meet only two of the three to count as "small." Company size is judged against your PRIOR financial year, so the real-world effect lands in the 2026-27 tax year, not the moment the threshold changes.
What this means in practice
If your business is newly "small"
You stop being required to issue Status Determination Statements for your contractor engagements. Responsibility for working out whether an engagement sits inside or outside IR35 moves back to the contractor's own limited company.
If your business was already small
Nothing changes for you - this update only affects businesses crossing INTO the small-company band from medium. If you're a typical UK SMB well under the current £10.2m turnover threshold, you were already exempt from issuing SDS paperwork before this change.
If a contractor was "inside IR35" under your old determination
Once your business no longer has to make the determination, that contractor needs to work out their own status going forward - and if they're now responsible for their own tax, they'll also need to budget for employer's National Insurance themselves, which industry estimates put at roughly 15% of contract value.
A quick check for every contractor engagement
Regardless of which side of the threshold you land on, these are the things worth having an answer to before (not after) a contractor starts.
Do you know your current status?
Work out whether your business is "small" under the CURRENT thresholds today, and note the date you'll need to re-check against the new ones (the start of your next financial year after 6 April 2026).
Is there a written determination on file?
If you ARE required to issue one, it needs to exist in writing, be passed to the contractor and the agency (if any), and be based on the actual working arrangement - not just what the contract says on paper.
Does the day-to-day match the paperwork?
Control, substitution rights, and mutuality of obligation are what HMRC actually looks at - a contract that says "self-employed" doesn't help if the contractor works like an employee in practice.
Is there a disagreement process?
Contractors have a statutory right to challenge a status determination. Having a named process (even a simple one) for that avoids it becoming an ad-hoc argument later.
Is this reviewed when the engagement changes?
A status determination reflects a working arrangement at a point in time - a contractor whose role expands or whose working pattern shifts can tip from outside to inside IR35 without anyone updating the paperwork.
Is the date this needs re-checking actually tracked somewhere?
Whether that's your own financial year-end against the new thresholds, or a contractor engagement due for its own periodic review - if it only lives in someone's memory, it gets missed.
Every contractor and consultant agreement Agreemnt finds gets a plain-English, four-factor IR35 read the moment it's added - a sense-check that's ready before you ask for it, not something scrambled together when a question comes up. Not ready to connect anything yet? Try the free contract audit first - no account needed.
Sources
- Threshold Changes to UK Off-Payroll Working Rules (IR35) - Greenberg Traurig LLP, March 2026. Confirms the 6 April 2026 effective date and the "prior financial year" basis for company-size assessment. gtlaw.com
- IR35 small company threshold changes 2026 - Kingsbridge, 2026. Source for the exact old/new turnover and balance-sheet figures, the ~14,000-company estimate, and the employer's NI cost estimate for contractors newly responsible for their own status. kingsbridge.co.uk
Spotted a source that's moved, been updated, or been superseded? Tell us at hello@agreemnt.co.uk and we'll correct it.
Start free - no card required.
Connect your inbox and Drive and see what's already there. Free for up to 10 contracts, and every plan includes your whole team.