Which organisations are responsible for applying the IR35 rules?

Medium- and large-sized non-public sector organisations are responsible for applying the IR35 rules (also known as the off-payroll working rules). The rules also apply to all public-sector bodies, regardless of size. Small private-sector organisations are not covered by the IR35 rules.

An organisation that is an incorporated entity (eg a limited company or a limited liability partnership) is classed as medium- or large-sized if, for the last two consecutive financial years, it meets at least two of the following criteria:

• its turnover is more than £10.2 million (increasing to £15 million for financial years beginning on or after 6 April 2025);
• its balance sheet total is more than £5.1 million (increasing to £7.5 million for financial years beginning on or after 6 April 2025); and
• it has an average of more than 50 employees.

If a small entity is part of a medium- or large-sized group, it is the size of the group (including overseas members) that is relevant.

There is a simplified test for unincorporated organisations (for example a not-for-profit employer, trade union or charity). Such an organisation is classed as medium- or large-sized if it exceeds the turnover threshold for the last financial year (£10.2 million, or £15 million for financial years beginning on or after 6 April 2025).

The increase to the turnover and balance sheet thresholds for financial years beginning on or after 6 April 2025 means that some organisations will fall out of the scope of the IR35 rules.