Changes to the company size thresholds from April 2025 will also apply for the purposes of the off-payroll working (OPW) rules.
The primary aim of the changes to the company size thresholds was to simplify regulatory requirements and alleviate the administrative burden for smaller businesses. HMRC has now confirmed that the new thresholds will also apply when deciding whether the OPW rules apply where companies engage workers via an intermediary.
For micro and small companies, the onus is on the contractor to determine its own status in relation to IR35. When a company breaches the threshold for medium sized entities, it is required to carry out the assessment for each contractor under the OPW rules.
To qualify as small from 6 April 2025 a company will need to satisfy two or more of the following criteria:
· Turnover not more than £15m (currently £10.2m)
· Balance sheet total not more than £7.5m (currently £5.1m)
· No more than 50 employees (currently 50)
Following the change many companies that are currently classed as medium will become small and will no longer be required to perform OPW assessments. If you are a contractor and provide services to medium-sized companies, you may be required to assess your own employment status if your client falls into the small company category when they thresholds change. We can help you with this.
It is currently unclear from the legislation when exactly the changes will take effect, although it is unlikely that they will be operational before April 2026. We are seeking clarification from HMRC on this and will update affected clients in due course.
