Who decides your IR35 status — you or your client?

In short: small private-sector client → your company decides. Medium or large private-sector client, or any public sector body → the client decides and must give you a Status Determination Statement (SDS) with reasons.

The question is always the same

Whoever decides, the legal test doesn't change. Imagine you had contracted directly with the end client, with no limited company or agency in between — the "hypothetical contract". Would that be a contract of employment? If so, the engagement is inside IR35 and employment taxes are due on the fees.

Small clients: Chapter 8 ("old IR35")

If the end client is a small private-sector company (see the 2026/27 thresholds), your own company is responsible. It decides the status of each engagement and, if inside, calculates a "deemed employment payment" at the end of the tax year. If HMRC later disagrees, your company is liable for the tax and National Insurance, with interest and possibly penalties.

Medium and large clients, and the public sector: Chapter 10 (off-payroll working)

The public sector has been responsible since April 2017 and medium and large private-sector clients since 6 April 2021. The client must:

• decide your status, taking reasonable care;
• give you and the party it contracts with an SDS stating its conclusion and its reasons;
• run a disagreement process and respond to a challenge within 45 days.

If the SDS says inside IR35, the "fee-payer" — usually the agency closest to you — deducts PAYE and National Insurance before paying your company. If the client doesn't give a valid SDS, or fails to respond to a disagreement in time, the tax liability can move to the client.

Which applies to you?

End client	Who decides	You should…
Small private-sector company	Your company	Review the contract and practices yourself and keep a record
Medium or large private-sector company	The client	Ask for the SDS and its reasons; challenge it if it's wrong
Public sector body	The client	As above
Overseas client with no UK presence	Usually your company	Take specialist advice — special rules apply

Why your contract still matters when the client decides

Even under the off-payroll rules, your contract and working practices are the evidence the client should weigh. A well-drafted contract that matches reality makes an outside-IR35 SDS easier to justify — and gives you specific points to raise if you disagree with an inside determination.

Sources: Chapters 8 and 10, Part 2, Income Tax (Earnings and Pensions) Act 2003; HMRC guidance on off-payroll working. General information, not tax advice.