Hiring in the United Kingdom: Complete Guide 2027

IR35 — formally known as the off-payroll working rules — is the single most misunderstood compliance topic for companies hiring in the UK. It determines whether a contractor should be treated as an employee for tax purposes, based on how and where they work rather than what their contract says. Since April 2021, the responsibility for making this determination sits with the end client (that's you), not the contractor, when the client is a medium or large business with a UK presence. For small clients and clients wholly outside the UK, the contractor's company decides. If you engage workers through a Personal Service Company (PSC) and HMRC deems them to be inside IR35, you become liable for unpaid income tax and National Insurance — often backdated. An EOR sidesteps this entirely by employing the worker directly, making the employment relationship explicit and fully compliant. If you're moving contractors onto payroll, your EOR provider should be able to support the transition; until then, the Status Determination Statements (SDS) remain your duty as the client.

Figures checked against official sources: HM Revenue & Customs (employer rates and thresholds 2026/27, off-payroll working rules); The Pensions Regulator (automatic enrolment); GOV.UK (Employment Rights Act 1996, Working Time Regulations 1998, statutory sick pay); Department for Business and Trade (Employment Rights Act 2025 timeline). Checked November 2026.