Which organisations are responsible for applying the IR35 rules from 6 April 2021?

Under the reforms to the IR35 rules (also known as the off-payroll working rules) from 6 April 2021, medium- and large-sized non-public sector organisations are responsible for applying the rules. Small private-sector organisations will not be covered by the IR35 rules. The rules have applied to all public-sector bodies, regardless of size, since April 2017.

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;
  • its balance sheet total is more than £5.1 million; 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 its turnover for the last financial year exceeds £10.2 million.