IR35 Off-Payroll Working Rules: What Contractors Need to Know in 2025

T he off-payroll working rules (IR35) determine whether contractors are genuine self-employed consultants or disguised employees for tax purposes. On 6 April 2025, HMRC updated its guidance to account for tax already paid by contractors when calculating liabilities, easing the transition into compliance for many umbrella workers.

What the Off-Payroll Rules Entail

Under IR35, the responsibility for determining a contractor’s status lies with the fee-payer—usually the agency or end client—rather than the contractor when working through an intermediary.

Contractors found “inside IR35” are taxed through PAYE, impacting net earnings and NIC liabilities.

Impact on Umbrella Contractors

Contractors engaged through umbrella companies often fall within the IR35 framework by default, as umbrellas operate PAYE on their behalf.

The 2025 rule update means that any tax paid via PAYE will be considered in HMRC’s liability calculations, reducing the risk of large retrospective bills.

How ASA Pay Solutions Supports You

ASA Pay Solutions offers hands-on guidance to mitigate the NIC hike:

Net Pay Impact Analysis
Modelling of your current contract to estimate net pay under the new NIC rate.
Fee Structure Review
Expert review of umbrella fee agreements to ensure transparent pass-through of employer costs.
Scenario Planning
One-to-one consultations to evaluate different payroll configurations and budgeting options.
Dedicated Support
Direct telephone and email advice so you can adjust your finances before 6 April 2025.

“ASA Pay’s detailed net pay modelling helped me understand exactly how my take-home would change—and plan accordingly.”

— Liam Turner, IT Contractor

IR35 Off-Payroll Working Rules: What Contractors Need to Know in 2025

How ASA Pay Solutions Supports You

Need more information?

Related posts