Changes to company threshold sizes which came into effect on 6th April 2025 will see a reported 14,000 medium-sized businesses reclassified as small businesses โ a move which will also โredraw the boundariesโ of the controversial off-payroll working rules.
This is according toย Qdos, an IR35 compliance specialist and insurance provider for flexible workers. The changes are expected to freeย 14,000ย businesses from the requirements of the off-payroll rules, putting potentially tens of thousands of contractors back in control of their IR35 status.
Before the introduction of the off-payroll working rules, contractors were responsible for determining their IR35 status. In 2021 in the private sector, this responsibility was handed to medium and large businesses engaging these workers, which also became liable for non-compliance.
Only in their engagements with small businesses do contractors remain responsible for determining IR35 status. As such, these changes will be welcomed by contractors as much as by businesses.
Speaking about the changes, Seb Maley, CEO of IR35 specialist,ย Qdos, said,ย โThis redraws the boundaries of the off-payroll working rules and is ultimately a very welcome move โ one that relieves thousands of businesses from the burden of IR35 and puts many more contractors back in charge of determining their IR35 status.
โUnder these contentious rules, contractors are responsible for determining their own IR35 status in engagements with small businesses. Engagements with medium and large businesses, on the other hand, see status decisions made by the client โ as they do in the public sector.
โThese complex rules have proven troublesome for businesses to implement and manage, with many choosing to stop engaging contractors for fear of non-compliance.ย As a result, businesses will welcome this shifting of the goalposts just as much as contractors โ who will now be back in control of determining their IR35 status among a wider pool of prospective clients.โ
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