IR35 for Contract Engineers: A Plain-English Guide
June 7, 2026 · 2 min read
If you contract through a limited company, IR35 decides whether HMRC treats you as genuinely in business on your own account — or as an employee in all but name. Get it wrong and the tax difference is significant. Here’s the plain-English version.
Inside vs outside, briefly
Outside IR35 means the engagement looks like a true business-to-business contract: you control how the work is done, you can send a substitute, and you carry real financial risk. You’re taxed as a business.
Inside IR35 means the engagement looks like employment — fixed hours, direction and control, no substitution. You’re taxed broadly like an employee.
The three tests that matter most
- Control — how much does the client direct what you do and how?
- Substitution — could you genuinely send someone else?
- Mutuality of obligation — is the client obliged to give work and you to accept it?
What good looks like
A clear SDS, a contract that reflects the actual working practices, and an honest assessment from a recruiter who won’t dress an inside role up as outside to win your signature. We document IR35 status for every contract role we place — and we’ll tell you straight which side of the line it sits.
Browse contract roles or register with us to hear about outside-IR35 opportunities first.