1) Know Which IR35 Regime You’re In (It Changes Who Carries the Can)
There are two “modes” in practice:
Medium or large private-sector client
If you provide services through your own limited company (PSC) to a medium or large private-sector client, the client decides the status (inside/outside) and must issue a Status Determination Statement (SDS). The fee-payer then operates PAYE if it’s inside.
Small private-sector client
If you work for a small private-sector client, the old IR35 rules apply and you (your intermediary/PSC) keep responsibility for assessing status and handling any deemed payment calculations if you’re inside.
That “small vs medium/large” boundary is where a lot of 2026 change sits.
2) Big 2026 Watch-Out: More Clients May Become “Small”
From 6 April 2026, the “small company” thresholds used for off-payroll working are set to become easier to meet, because the turnover and balance sheet limits increase (while the employee number stays the same). That means some organisations that previously sat in “medium” may fall into “small”, and the IR35 decision responsibility can shift away from the client and back to the contractor/PSC.
Why it matters in real life
You can be doing the same role, same manager, same deliverables, and yet the admin burden and tax risk flips depending on your client’s size classification for the relevant period.
What to do (contractors)
Ask every new client (and any renewing client) one blunt question: “Are you classed as small for off-payroll working for this engagement?” and keep the answer in writing. If they say “small”, assume you need to do your own IR35 position properly.
What to do (small companies engaging contractors)
If you’re small, you may not have to run Chapter 10 processes (SDS, disagreement process etc.), but you still need clean contracts and working practices. If a contractor is “inside” under the original IR35 rules, they may push rate changes or prefer umbrella, so you want to be clear early.
3) Umbrella Supply Chains: New PAYE Rules Land on 6 April 2026
If you hire contractors via agencies and umbrella companies, 2026 brings extra PAYE-focused rules for labour supply chains involving umbrella companies, applying to money paid on or after 6 April 2026. This is aimed at improving collection where PAYE/NIC goes missing in parts of the chain.
Why contractors should care
Even if you’re not the one “responsible” for PAYE in an umbrella model, these rules change behaviours. Expect more audits of payslips, deductions, and who sits where in the chain. Some roles may move away from umbrella setups or tighten approved supplier lists.
What to do (contractors working via umbrella)
Check your payslip structure, deductions, and that the arrangement is transparent. If you cannot get straight answers about pay and deductions, treat it as a red flag.
4) HMRC Compliance Is Getting More Systematic, Not More Forgiving
The general direction has been toward more structured compliance programmes: identifying off-payroll populations, checking determinations, and looking for consistency between contract and reality.
What this means on the ground: If you want “outside IR35”, you need the boring evidence: substitution clause that is usable in practice, genuine control sitting with you, financial risk, and a relationship that looks like a supplier delivering outcomes rather than a quasi-employee filling a seat.
5) The Practical 2026 Checklist (Use This for Every New Contract)
Step 1: Confirm client size and regime
Get written confirmation of whether they’re small for OPW. File it with your contract pack.
Step 2: Make the contract match reality
Outside-leaning contracts that behave like employment day-to-day are the fastest route to pain. Align deliverables, acceptance criteria, who controls how work is done, and substitution mechanics.
Step 3: Build your “outside” evidence pack
Keep: SOW, change requests, milestones, invoices tied to outcomes, proof you supply your own kit (where relevant), proof you can refuse work outside scope, proof you work for multiple clients (where true).
Step 4: If inside, price it properly
Inside IR35 is not “bad”, but it is different. Make sure the rate reflects employer NIC, the loss of dividends efficiency, and any umbrella margin.
Step 5: Don’t treat job ads as status
Ads that say “inside IR35” are a clue to payroll handling, not a legal conclusion. The actual status still depends on the engagement facts.
Red Flags vs Green Flags
Red flags (inside-leaning)
Green flags (outside-leaning)
6) What Small Companies Should Watch
If you’re a small company engaging contractors directly:
- Keep engagements outcome-based where possible, with clear deliverables and acceptance criteria.
- Avoid line-management behaviours that make contractors look indistinguishable from employees (set hours, appraisals, being “part of the team” in a way that implies control).
- If you use agencies or umbrella chains, get ahead of the April 2026 PAYE supply chain changes with tighter onboarding and supplier checks.
7) A Simple Way to Think About 2026
Two themes:
More clients may newly qualify as “small”, which can push IR35 responsibility back onto contractors.
Umbrella and supply chain compliance tightens from 6 April 2026, so expect more scrutiny and more paperwork even when you are not trying to be clever.
If you’re a contractor, your best move in 2026 is to be disciplined: confirm regime, document the facts, and keep your contract aligned with how you actually work.
If you’re a small company, the best move is clarity: define outcomes, keep governance light but real, and avoid turning suppliers into pseudo-staff by habit.
Your Evidence Pack: What to Keep
Signed contract / SOW
SDS (if issued)
Invoices + PO refs
Milestones / sign-off
Change requests
Proof of autonomy
Business proof
Timesheets
What to Do This Week
Confirm client size (small vs medium/large) in writing
Ask the question directly. Keep the response on file.
Align contract to reality (deliverables + control)
Make sure what the contract says matches what actually happens day-to-day.
Build a 1-folder evidence pack per engagement
One folder. SOW, invoices, milestones, comms. Keep it simple and keep it current.