IR35 is anti-avoidance tax legislation which sets the rules to make sure contractors working through personal service companies (PSCs) pay the correct tax. The rules are in place to address what HMRC describe as “deemed employment”, where individuals operating through PSCs work like employees and they should pay broadly the same income tax and NICs regardless of the structure they work through.
The first piece of legislation came into force in April 2000. In April 2017 the government introduced the “off-payroll working reforms”, a separate piece of new tax legislation applying to the public sector. This is being extended to the private sector from 6 April 2021.