IR35 Rules Explained: Inside vs Outside IR35 & What It Means for Contractors

HMRC & Compliance · 10 min read · Updated 2026-03-20

Understand the IR35 off-payroll working rules, how to determine your IR35 status, the differences between inside and outside IR35, and the tax implications for contractors and limited companies.

Written by Krishna, Founder & HMRC-registered tax agent at TaxRoot.

What is the difference between inside and outside IR35?

Inside IR35 means HMRC considers you an employee for tax purposes, so tax and NI are deducted at source by the fee-payer. Outside IR35 means you are genuinely self-employed and can take income through your company via salary and dividends with associated tax efficiencies. The determination is based on the…

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