Am I Inside IR35? Self-Assessment Checklist

What IR35 Means for You

IR35 — officially known as the Intermediaries Legislation — determines whether a contractor working through a personal service company (PSC) or intermediary should be taxed as an employee for a specific engagement. If you're "inside IR35," you pay broadly the same income tax and National Insurance as an employee would. If you're "outside IR35," you can take advantage of the more favourable tax treatment available to directors of limited companies.

The financial difference is substantial. A contractor earning £500 per day, working 220 days per year, could see their take-home pay differ by £15,000 to £25,000 per year depending on whether they're inside or outside IR35. Getting this assessment wrong — in either direction — has serious consequences.

This checklist walks you through the key factors that determine your IR35 status. It's based on the same principles that HMRC uses, employment law case precedents, and the tests that status determination statements should consider.

For a comprehensive explanation of IR35 legislation, read our complete IR35 guide.

The Three Core Tests

Employment status for tax purposes rests primarily on three tests established through decades of case law. No single test is definitive — HMRC and tribunals consider the overall picture. But understanding each test and honestly assessing where you fall is the foundation of any IR35 evaluation.

Test 1: Personal Service (Substitution)

The question: Can you send a substitute to do the work in your place, and would the client accept this?

This is often considered the most important test. A genuine employee must perform the work personally — the employer hires the individual, not a replaceable resource. A genuine contractor, by contrast, provides a service and should be able to send a suitably qualified substitute.

You're likely outside IR35 if:

• Your contract includes a genuine, unfettered right of substitution
• You have actually sent a substitute on at least one occasion, or have a realistic ability to do so
• The client would accept a substitute of equivalent skill
• You're responsible for paying the substitute from your own fees

You're likely inside IR35 if:

• The client requires you personally to do the work
• There's no substitution clause in your contract, or the clause is heavily restricted (e.g., the client must approve any substitute)
• In practice, you would never realistically send someone else
• The idea of sending a substitute seems absurd for the engagement

Be honest with yourself: A substitution clause in your contract is helpful but not sufficient. HMRC looks at the practical reality, not just the contractual terms. If you've never sent a substitute and realistically never would, a contractual right carries less weight.

Test 2: Mutuality of Obligation (MOO)

The question: Is there an ongoing obligation for the client to provide work and for you to accept it?

In an employment relationship, the employer is obliged to provide work (and pay) and the employee is obliged to accept and perform it. This mutual obligation is a fundamental feature of employment.

You're likely outside IR35 if:

• You're engaged for a specific project or deliverable with a defined end point
• You can decline work offered to you without consequences
• There's no obligation for the client to offer you further work after the current engagement
• There are gaps between engagements with the same client

You're likely inside IR35 if:

• You're expected to be available during set hours, indefinitely
• You can't decline tasks assigned to you
• The client provides continuous work and you're expected to accept it
• The arrangement has no defined end date and rolls on indefinitely

Test 3: Control

The question: Does the client control what you do, how you do it, when you do it, and where you do it?

Employees are subject to the employer's control — they're told what to work on, how to approach it, when to work, and where. Genuine contractors exercise significant autonomy.

You're likely outside IR35 if:

• You decide how to complete the work (methodology, tools, approach)
• You set your own hours and schedule
• You can work from wherever you choose
• The client specifies the deliverable but not the method

You're likely inside IR35 if:

• The client dictates your working methods and processes
• You must work set hours or core hours at the client's premises
• You're managed day-to-day in the same way as employees
• You attend team meetings, follow internal procedures, and use client-provided equipment

Additional Factors to Consider

Beyond the three core tests, HMRC and tribunals consider several other factors that colour the overall picture.

Financial Risk

Outside IR35 indicator: You bear financial risk. You've invested your own money in equipment, training, or marketing. You're paid for deliverables, not time. If the work isn't satisfactory, you correct it at your own expense. You don't get paid if you don't work (no holiday pay, no sick pay).

Inside IR35 indicator: You bear no financial risk. The client provides all equipment. You're paid hourly or daily regardless of the quality of your output. You receive benefits similar to employees (even if informally).

Part and Parcel of the Organisation

Outside IR35 indicator: You're clearly a separate business providing a service. You don't have a company email address, staff badge, or appear on the organisation chart. You're not invited to team social events or all-hands meetings. Your contract is for a defined deliverable.

Inside IR35 indicator: You're integrated into the client's organisation. You have a company email, attend staff meetings, have a desk alongside employees, appear on the org chart, and are treated identically to permanent staff by colleagues.

Exclusivity

Outside IR35 indicator: You work for multiple clients simultaneously or could do so. Your contract doesn't prevent you from working for others (including competitors, within reason).

Inside IR35 indicator: You work exclusively for one client with no other business activity. Your contract includes restrictive covenants that prevent you from working for others.

Provision of Equipment

Outside IR35 indicator: You provide your own equipment — laptop, software, tools, vehicle. You bear the cost of maintaining and replacing these.

Inside IR35 indicator: The client provides all equipment. You use the client's laptop, software licences, and tools.

The Self-Assessment Checklist

Rate yourself honestly on each factor:

| Factor | Outside IR35 | Inside IR35 | Your Assessment | |---|---|---|---| | Substitution right (contractual) | Unfettered right | No right or heavily restricted | | | Substitution (practical reality) | Have or would send substitute | Would never send substitute | | | Mutuality of obligation | Project-based, can decline work | Ongoing, must accept work | | | Control over method | You decide how | Client dictates how | | | Control over hours | You set schedule | Client sets hours | | | Control over location | Your choice | Client's premises required | | | Financial risk | Bear genuine risk | No risk | | | Part of organisation | Clearly separate | Fully integrated | | | Exclusivity | Multiple clients | Single client only | | | Equipment | You provide | Client provides | |

If the majority of your honest assessments fall in the "outside" column, your engagement is more likely to be outside IR35. If most fall in the "inside" column, you should seek professional advice before claiming to be outside IR35.

What HMRC's CEST Tool Says (and Its Limitations)

HMRC provides the Check Employment Status for Tax (CEST) tool online. It asks a series of questions and provides an indication of whether an engagement is inside or outside IR35. However, the CEST tool has significant limitations:

• It doesn't adequately consider mutuality of obligation
• It can produce "undetermined" results that leave you no better off
• Its results are not legally binding (though HMRC says it will stand by them if the information entered was accurate)
• It doesn't consider the overall picture in the nuanced way that tribunals do

The CEST tool is a starting point, not a definitive answer. For engagements worth significant sums, professional advice from an employment status specialist is a worthwhile investment. According to HMRC's own guidance, the tool is designed to give an indication of status for a specific engagement.

Who Determines Your Status?

Since the April 2021 reforms, for medium and large private sector clients, the end client is responsible for determining your IR35 status and issuing a Status Determination Statement (SDS). For small companies (as defined by the Companies Act), the responsibility remains with your PSC.

This matters because if a client determines you're inside IR35, the fee-payer (often the agency) must deduct tax and NI before paying your PSC. You can dispute the determination through the client's disagreement process, but in practice, many contractors find it difficult to overturn a client's assessment.

Our guide on how to prove you're outside IR35 provides practical advice on building evidence for your status.

Taking Action Based on Your Assessment

If you're clearly outside IR35: Ensure your contracts reflect the reality of your working arrangement. Document your substitution rights, financial risk, and control over your work. Keep evidence of working for multiple clients. Review our self-assessment guide for filing advice.

If you're clearly inside IR35: Budget for the higher tax burden. Consider whether the engagement is still financially worthwhile at inside-IR35 rates. Explore whether the working arrangement could be restructured to move outside IR35.

If it's borderline: Seek professional advice. An IR35 status review from a specialist typically costs £300-£600 and can save you thousands in the long run. Consider IR35 insurance to protect against an adverse HMRC determination.

For help understanding how IR35 interacts with your broader tax planning, explore our analysis of HMRC's IR35 detailed guidance and our post on sole trader vs limited company.

If you'd like help tracking your income, expenses, and tax position — whether you're inside or outside IR35 — sign up for Accounted and let me handle the bookkeeping while you focus on your contracts.

Useful Resources

• HMRC's Self Assessment guidance
• HMRC's capital allowances guidance

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