Learn what IR35 (off-payroll working rules) means for UK freelancers and clients on Upwork, how tax status is determined, and what to do if you’re affected.
In this article
- What is IR35 — off-payroll working rules?
- How does IR35 impact clients on Upwork?
- How does IR35 impact freelancers on Upwork?
Disclaimer:
This article is for general information only and should not be considered tax advice. It may not be updated in real time and may not reflect recent changes. We strongly encourage you to consult your country’s tax authority or your tax advisor with questions related to your specific situation.
What is IR35 — off-payroll working rules?
IR35 is a UK tax rule that applies when a freelancer works through a Personal Services Company (PSC) instead of being on a company's payroll but essentially acts like an employee. It’s designed to make sure the right taxes (like income tax and National Insurance) are paid.
How does IR35 impact clients on Upwork?
If you're a medium or large business with a presence in the UK, you're responsible for figuring out if the freelancer you’ve hired would count as an employee if they didn’t use a PSC.
You can use HMRC’s tool to help make that call.
- If the freelancer qualifies as a true independent contractor, no changes are needed — carry on as usual
- If they’d be considered an employee, email us at legalnotices@upwork.com with the details. We’ll help move the freelancer to Upwork Payroll so that taxes are handled correctly
How does IR35 impact freelancers on Upwork?
If your client falls under IR35 rules, they’re the ones who decide your tax status. You’ll get a Status Determination Statement (SDS) explaining how they reached their decision.
- If you disagree with the SDS, you have the right to challenge it
- It’s always a good idea to speak with a qualified tax advisor to understand how IR35 might affect you personally