IR35 and Exemptions

Are sole traders exempt from IR35?

Sole traders are not in the scope of the IR35 legislation as they provide services to clients directly and do not engage via an intermediary such as a limited company. Nevertheless, it's important to note that even if the engagement is classified as a sole trader arrangement by both parties, HMRC may still argue that the engagement was actually one of employment, resulting in the need for additional taxes to be paid by the hiring firm.

More detail

IR35 legislation does not cover sole traders, who offer their services directly to clients without utilising intermediaries like limited companies. However, despite categorising the engagement as a sole trader setup, HMRC might still argue that the engagement represents an employment arrangement and requires payment of additional taxes by the hiring firm.

Consequently, it's important to conduct a comprehensive review of the workers arrangements to determine the appropriate tax status.

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