Is IR35 Insurance worth it?
One of the greatest obstacles if you’re a contractor, recruiter or end client that engages with contractors, is dealing with…
‘If there’s no intermediary, there’s no place for the Intermediaries legislation.’ Rinse, repeat — appeals Kingsbridge’s Ryan Dawson.
If you hadn’t noticed, IR35 has an awful amount of myths around it.
To some degree, I get it.
The complexity of the rules, the opaqueness of HMRC guidance, and the general fog surrounding employment status are legendary, almost conjuring up further falsehoods, writes Kingsbridge IR35 Project Manager Ryan Dawson.
When IR35 applies is still a source of confusion 25 years on.
However, one thing that is crystal clear is when IR35, or the Off-Payroll Working (OPR) rules, does and does not apply.
And given that IR35 has been with us for 25 years in one form or another, it’s high time every contractor, recruiter and client had clarity on when IR35 does and doesn’t apply.
An ‘Inside/Outside IR35 guide’ this is not!
Let me first be even more clear.
I’m not referring to ‘Inside IR35’ or ‘Outside IR35.’
Instead, I’m referring to whether IR35, or the OPW working legislation of April 6th 2017 (public sector) and April 6th 2021 (private sector), is applicable — technically, and irrespective of any status determination for tax purposes.
In other words, before one can even get to ‘Inside IR35’ or ‘Outside IR35,’ is IR35 actually in play, or not?
IR35 rules apply if a worker provides their services through their own intermediary (usually a limited company, often known as a PSC). We’ll stick with PSC for this article, but a worker affected by the rules may also (in rare circumstances) provide their services through:
- a partnership or
- another individual.
IR35 can only ever apply where a Personal Service Company (PSC) is present
On the most basic level — and this is fundamental to grasp, IR35 can only ever apply where:
- the contractor is operating via their own intermediary
More often than not, a limited company will be the contractor’s PSC vehicle of choice.
Under the OPW rules, workers who operate via a PSC will then be determined as ‘Inside IR35’ (employed) or ‘Outside IR35’ (genuinely self-employed).
When does IR35 NOT apply?
Well, without the existence of a PSC (‘the intermediary’), IR35 (‘the Intermediaries legislation’) cannot apply.
I don’t mean to teach any grandmas reading Kingsbridge’s Blog to suck eggs!
But I’ll explain why I’m here.
A social media post with more impressions than I’d care to angrily shake a chicken at, to an untold number of people who ‘Liked’ it, stated last week:
“IR35 ALWAYS APPLIES.”
Except it doesn’t.
The acronym and two words were seemingly intentionally left in CAPS to berate a recruiter who said “IR35 doesn’t apply” about the contractor’s prospective role.
When, to be technically correct, what the recruiter ought to have said is that the role was ‘Outside IR35.’
Not one, but two IR35 wrongs…
But in correcting that wrong assertion, the contractor made a wrong assertion of their own, by telling fellow contractors (who invariably in 2025-26 don’t all use PSCs) that: “IR35 always applies.”
Merely writing the phrase, let alone seeing it on screen again, makes me want to rethrow that already shaken-about chicken!
Anyway, in our role as an IR35 insurer that aims to clarify the often obscure, Kingsbridge recently moved to define ‘blanket bans’ and ‘blanket determinations’ under IR35.
Does IR35 apply to umbrella company contractors?
In most instances, both of these result in affected contractors operating via an umbrella company.
Crucially, though, IR35 does not apply to umbrella company contractors.
Why? Well, the so-called ‘disguised employment’ legislation (IR35) has no place, because the umbrella company employs the contractor and pays them through PAYE.
Four things that being an umbrella company contractor means in 2025/26…
When a bonafide, HMRC-compliant PAYE umbrella company employs a contractor, it means 4 things:
- There is no PSC, i.e. no ‘intermediary,’ therefore the ‘Intermediaries legislation’ cannot apply.
- The contractor is an employee of the umbrella company.
- No Status Determination Statement (SDS) is necessary /needs to be provided, and;
- Neither an ‘Inside IR35’ nor ‘Outside IR35’ determination is required/applicable.
Poorly worded job adverts aren’t helping IR35 misunderstanding
But it’s not just well-intentioned contractors muddying the naturally murky waters of IR35 status!
Many recruiters and clients are confusing themselves (and potentially in turn their would-be contractors) with sloppy wording in job adverts.
Two ‘IR35’ job adverts for contractors be like…
Here are just two examples from ‘IR35’ job adverts in the last 24 hours:
In most cases, contractors are switched on and so will recognise what the above two wrongly worded adverts mean, in practice, even if the terms aren’t used correctly.
HMRC guidance on IR35 isn’t clearing up potential confusion
Not helping matters, it’s the taxman.
In fact, even within HMRC’s own guidance, the tax authority advises:
“If the client decides that off-payroll working rules would apply to the role, the job advert may describe it as being ‘inside IR35’. This may mean that, either:
- you are deemed to be an employee
(Translated by Kingsbridge: This would mean the presence of a PSC, engaged inside IR35.)
- the client (or recruitment agency) asks you to be employed through an umbrella company.”
(Translated by Kingsbridge: There is no PSC/limited company permitted, and therefore IR35 cannot and so does not apply).
Terminology often evolves over time.
Sometimes, that evolution can be a good thing!
Grasp IR35 of 2000, before umbrella company tax rules of April 2026 apply
But considering the April 2026 spotlight on umbrella companies and HMRC’s focus on tax compliance, we must get the key terms correct. The contractor supply chain must also ensure that every party is clear about what does and does not apply, and when.
I genuinely hope this blog has gone some way towards achieving those goals.
Still unsure? Put simply, if the client or recruiter engages a worker via an umbrella company, IR35 does NOT apply at all.
Partnering with Kingsbridge
Whether you’re a recruitment agent, accountant, or provide professional services to contractors and freelancers, partnering with Kingsbridge not only means you benefit from expert insurance & IR35 advice and support, your contractors do too – we can help them secure comprehensive Contractor Insurance including fundamental cover like PL, PI, personal accident and more.
As a Partner, referring contractors could also offer an extra revenue stream – talk to one of our in-house specialists to find out more. You can get in touch online or call on 01242 801 603.
