What is Outside IR35?

If a role is advertised as "outside IR35", it means the engagement is intended to be treated as genuine self-employment for tax purposes.

In practice, this usually means you can work through your own limited company and pay yourself in the usual way, rather than being taxed like an employee.

For many UK contractors, outside IR35 roles are generally more financially attractive and offer greater flexibility than roles that fall inside IR35.

A simple explanation

Think of IR35 as a set of tax rules designed to determine whether someone working through a limited company is genuinely operating as an independent business or is effectively an employee.

  • Outside IR35 means you're considered to be providing services as an independent contractor.
  • Inside IR35 means the working arrangement is treated as similar to employment for tax purposes.

Whether an engagement is inside or outside IR35 depends on how the working relationship operates in reality, not simply what the contract says.

Want to understand the differences? Read our guide to Outside IR35 vs Inside IR35

Why does Outside IR35 matter?

For contractors, an outside IR35 determination can mean:

  • Greater take-home pay (depending on your circumstances)
  • More flexibility in how you operate your limited company
  • The ability to work as an independent business rather than being taxed like an employee

For clients, it means they are engaging a genuine supplier of services rather than someone who is effectively working as an employee.

Who decides whether a role is Outside IR35?

Since the off-payroll working reforms:

  • Public sector clients generally decide the IR35 status.
  • Medium and large private sector clients also normally make the determination.
  • Small private companies are generally exempt from these rules, meaning the contractor is usually responsible for determining their own status.

Does "Outside IR35" guarantee anything?

No.

Seeing "outside IR35" on a job advert is a good sign, but it shouldn't be treated as a guarantee.

The actual working relationship still needs to reflect genuine self-employment. If the reality of the engagement differs from what's described, the IR35 status could be challenged.

Read How to Tell if a Role is Really Outside IR35 for the signs to look for.

Are all contractor roles Outside IR35?

No.

Many roles are advertised as outside IR35, while others are inside IR35, and some don't specify an IR35 status until later in the hiring process.

It's always worth confirming the IR35 status before accepting a role.

Finding Outside IR35 roles

Outside IR35 opportunities are commonly available across areas such as:

  • Software Engineering
  • Data Engineering
  • DevOps & Cloud
  • Cyber Security
  • Product Management
  • Project & Programme Management
  • Business Analysis
  • Architecture
  • QA & Test
  • AI & Machine Learning

Many are offered on a day-rate basis and may be remote, hybrid or office-based.

Looking for your next contract? Read our guide to How to Find Outside IR35 Jobs.

Frequently asked questions

Is outside IR35 always better?

For many contractors, yes, but it depends on your circumstances, working preferences and the role itself.

Can an outside IR35 role become inside IR35?

Yes. If the working arrangements change significantly, the IR35 status may also change.

Do I need a limited company?

Most outside IR35 contractors operate through a limited company, although individual circumstances vary.

More questions?

See our Outside IR35 FAQ for answers to the most common questions contractors ask.