IR35 Contractors accounting, handled.
A blanket "inside IR35" determination from your end client can cost you a third of your day rate, unless someone pushes back.
An accountant for IR35 contractors does far more than file your accounts, we read your actual working practices against the off-payroll rules, pressure-test status determinations, and structure your limited company so you keep what you've genuinely earned. Whether you're outside IR35 on most engagements or caught inside on a public-sector or large-client contract, the difference between getting it right and getting it wrong is thousands of pounds and HMRC's attention. Zmartly gives you a named, ACCA-qualified accountant who knows the contractor rulebook, control, substitution, mutuality of obligation, CEST, deemed payments, and prices it at a fixed monthly fee with no surprises.
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What a ir35 contractor specialist gets right.
- 01
Who decides your status, and who pays if it's wrong
Since April 2021, when you contract for a medium or large private-sector client (or any public-sector body), the CLIENT decides whether you're inside or outside IR35 and must give you a Status Determination Statement (SDS) with reasons. If they engage you through an agency, the fee-payer deducts PAYE and NICs before you're paid. Only when your end client is genuinely small does responsibility stay with your own limited company under the original Chapter 8 rules. We work out which regime applies to each engagement so the right party carries the liability.
- 02
The 'small client' exemption got bigger in April 2025
If your end client qualifies as small, the off-payroll reform doesn't apply and you self-assess your own status. From 6 April 2025 the thresholds rose: a company is small unless it breaches two of three tests, turnover over £15 million, balance-sheet total over £7.5 million, or more than 50 employees (up from the old £10.2m / £5.1m limits). That uplift pulls thousands of mid-sized clients back into 'small', shifting the decision, and the tax risk, back to you. We track each client's size so you're never caught out.
- 03
Inside IR35 doesn't have to mean a bad deal
If an engagement is genuinely inside IR35, the deemed payment is taxed broadly as employment income, but it's not the end of your company. Under the old Chapter 8 calculation a flat 5% allowance covers running costs without receipts (note: this 5% is removed for public-sector and large-client off-payroll engagements). You can still draw a mix of salary and dividends from genuinely outside work, claim pension contributions through the company, and use the Employment Allowance where eligible. We model your real engagement mix rather than assuming the worst.
- 04
MTD for Income Tax is coming for many contractors
Making Tax Digital for Income Tax starts from April 2026 for sole traders and landlords with qualifying income over £50,000, extends to over £30,000 in April 2027 and over £20,000 in April 2028. If you run as a sole trader alongside your company, or have rental income, you'll need to keep digital records and file quarterly updates. We get you onto Xero, QuickBooks, FreeAgent or Sage early so the deadline is a non-event.
- ACCAChartered-qualified accountants on your file
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- 72 hrsReply commitment, every query
- From £99Fixed monthly, no surprise bills
Everything a ir35 contractor needs, in depth.
01The three status tests that actually decide IR35
HMRC and the courts weigh three core factors from Ready Mixed Concrete onwards: personal service (can you send a genuine substitute, or must you do the work yourself?), control (does the client direct how, when and where you work?), and mutuality of obligation (must they offer work and you accept it?). A real, unfettered right of substitution and a lack of control point firmly outside IR35. We review your contract AND your day-to-day reality, because HMRC looks at the working practices, not just the paperwork.
02CEST: using HMRC's own tool to your advantage
Check Employment Status for Tax (CEST) is the only tool HMRC says it will stand behind, provided the answers are accurate and match how you actually work. A clean 'outside IR35' CEST result, kept with the engagement file, is strong evidence. But CEST is only as good as its inputs, answer it wrong on substitution or control and you'll get a misleading outcome. We run CEST with you, document the reasoning, and keep the output as part of your audit trail.
03Challenging a wrong Status Determination Statement
If a client labels you inside IR35 and you disagree, you have a right to challenge it through their status disagreement process, and they must respond within 45 days with their decision and reasons, or the SDS becomes invalid and liability falls back on them. A weak, blanket 'inside' determination (the kind issued role-by-role without considering your real terms) is exactly what the disagreement process exists to fix. We draft the evidence-based challenge for you.
04Salary, dividends and the 2026/27 numbers that matter
For outside-IR35 work, the efficient route is usually a modest salary plus dividends. The dividend allowance is now just £500, with dividend tax at 10.75% / 35.75% / 39.35% across the bands, and the dividend allowance gives far less shelter than it once did. Corporation Tax runs at 19% to £50k profit, 25% above £250k, and an effective 26.5% marginal rate in between. We build your remuneration plan around your actual profit and your other income, not a one-size template.
05Expenses, pensions and capital allowances that survive scrutiny
Genuine business costs reduce your Corporation Tax: equipment, software, accountancy, and travel to a temporary workplace (watch the 24-month rule). Employer pension contributions from the company are a powerful, tax-efficient way to extract profit. On equipment, the Annual Investment Allowance gives 100% relief up to £1,000,000, and from April 2026 the main-pool writing-down allowance falls from 18% to 14%, with a new 40% first-year allowance for main-rate plant from 1 January 2026, timing purchases matters. We flag what's claimable and what HMRC will reject.
06VAT, the Flat Rate Scheme and staying compliant
You must register for VAT once taxable turnover exceeds £90,000 (deregistration threshold £88,000). Many contractors use the Flat Rate Scheme, but the 16.5% 'limited cost trader' rate often makes it worse than standard VAT once you account for input tax, it needs checking, not assuming. We review whether FRS, standard, or staying under the threshold suits you, and handle quarterly returns through your software so nothing slips.
Tax guides worth a read
Plain-English explainers, kept current with the latest HMRC rules.
Frequently asked questions.
It comes down to how you actually work, judged on three tests: personal service (can you send a substitute?), control (does the client tell you how to do the job?), and mutuality of obligation (must they give you work and you take it?). If you genuinely operate like a business, your own equipment, multiple clients, real substitution rights, and freedom over how you deliver, you're likely outside. We assess your contracts and working practices against these tests and run HMRC's CEST tool to document the position.
For medium and large private-sector clients, and all public-sector bodies, yes, since April 2021 the client makes the determination and must give you a Status Determination Statement. But if your end client is genuinely small (now broadly turnover under £15m, balance sheet under £7.5m, or 50 or fewer employees), the decision stays with your own company. We confirm which rules apply to each engagement so you're not paying tax you don't owe.
Yes. The client must operate a status disagreement process and respond within 45 days with their decision and reasons, if they don't, the determination is invalid and the tax liability can shift back to them. Blanket 'inside' decisions made without looking at your real terms are challengeable. We help you build an evidence-based case, citing your substitution rights, lack of control and other markers of self-employment.
Not at all. Many contractors have a mix of inside and outside engagements, and your company still works for the outside ones, for pension contributions, and for limited liability. Even on inside work, the original Chapter 8 rules give a flat 5% allowance for running costs (though this 5% is withdrawn for public-sector and large-client off-payroll engagements). We model your actual mix rather than assuming the worst-case position.
If you have sole-trade or rental income above the thresholds, yes. MTD for Income Tax starts April 2026 for qualifying income over £50,000, April 2027 for over £30,000, and April 2028 for over £20,000, meaning digital records and quarterly updates. Income drawn through your limited company as salary and dividends isn't directly in scope, but any personal self-employment or property income may be. We get you onto compliant software early so it's a non-event.
Fixed monthly pricing at £99, £199 or £499 depending on the support you need, no hourly surprises and no charge for asking a quick question. You get a named, ACCA-qualified accountant, replies within 72 hours, and we work in Xero, QuickBooks, FreeAgent or Sage. It's rolling monthly with a 30-day money-back guarantee, so there's no long tie-in if it's not the right fit.
Yes. You must register once taxable turnover passes £90,000, and many contractors default to the Flat Rate Scheme, but the 16.5% limited-cost-trader rate often makes it worse than standard VAT once input tax is counted. We run the numbers on FRS versus standard accounting for your specific spend and handle quarterly returns through your accounting software.
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Thirty minutes with an ACCA-qualified accountant. Most owners uncover £1,000-£3,000 in annual savings on the first call. If we are not the right fit, you walk away with a free tax review on the house.
