How do you determine the size of the end client for the purposes of the new IR35 rules?

The three criteria which determine the size of an end client within the private sector are:

  • Annual Turnover > £10.2m
  • Balance sheet of > £5.1m
  • > 50 employees

The size rules are important as the size rules dictate when you will have to apply the new IR35 (off payroll worker) rules as an end client.

They are also now going to be important to the “worker” too as the Government now propose that the end worker will be able to require the end client to provide confirmation of the size of their businesses. So for those two reasons, end clients will need to know how to assess the size of their business for the new rules. 

We are happy to advise individual businesses or charities on their status, but in outline:

  • If you are a private sector end client (e.g. a limited company, corporate group or a LLP) which meets two of the three criteria for two consecutive financial years, then you will be classed as a medium/large business for the purposes of the IR35 legislation.
  • For non-corporates (“traditional partnerships” or unincorporated businesses), there is a simplified test based on turnover only.  If your turnover is >£10.2m you will be classed as a medium/large business and the IR35 legislation will apply.
  • For charities, the tests are effectively the same as for companies, but you can remove from turnover any donations or grants you have received which are included within turnover in your accounts.
  • There are also rules which cover connected and associated companies. UK businesses should apply the off-payroll working rules if their worldwide group is classed as medium or large (even if the UK company would be considered small on a stand alone basis).
  • Wholly overseas organisations with no UK presence will be excluded from having to consider the new rules.

At MHA Tait Walker, we have a comprehensive understanding of the new IR35 legislation, which comes into force on 6 April 2020.

If you have any queries on this or any other matters relating to the new IR35 legislation, please don’t hesitate to contact us on 0191 285 0321 or email

Other blogs in this series

Is your business ready for the new IR35 rules?

How do you determine employment / IR35 status?​

How do you account for workers that fall within the new IR35 rules for tax purposes?

Do the IR35 changes only apply to engagements with medium and large businesses in the private sector?