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The short answer

Three dates get mixed up in coverage of this change, so it is worth separating them before anything else.

The company size thresholds in the Companies Act rose for financial years beginning on or after 6 April 2025. That part has already happened.

The off-payroll consequence, meaning the point at which a client that used to be medium-sized counts as small and hands the IR35 determination back to you, arrives no earlier than 6 April 2027. HMRC states this directly: "The threshold changes will have no practical impact for OPW until 6 April 2027, at the earliest, because a company's size is determined by reference to previous years." That is from the April 2025 Employer Bulletin.

April 2026 is not a date on which anything happens to these thresholds. Something else does change on 6 April 2026, covered further down, and that is probably where some of the confusion comes from.

What the small company exemption does

Since the 2021 private sector reforms, responsibility for determining a contractor's IR35 status sits with the end client. If your client says you are inside IR35, they carry that decision and deduct tax accordingly. If they say outside, they carry the liability if HMRC disagrees.

There is an exemption. Small clients are excluded from that responsibility. If your client meets the Companies Act 2006 definition of small, the older Chapter 8 rules apply instead, which means you as the contractor are responsible for your own determination, and you carry the liability if you get it wrong.

The exemption has not been removed. What has changed is the definition of small, and it has moved so that more companies fall inside it, not fewer. That is the opposite direction from most of the IR35 changes of the last decade, and it means the responsibility is moving back toward contractors rather than away from them.

What changed, and when

A company qualifies as small if it meets at least two of these three criteria:

The uplift came in under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, and applies to financial years beginning on or after 6 April 2025.

Why the off-payroll effect lags by two years

This is the part that gets missed, and it is the whole reason the date confusion exists. Two rules combine to delay the effect.

Your client's size is judged on a previous financial year, not the current one. For any given tax year, HMRC looks at "the last financial year for which the period for filing its accounts and reports ended before the beginning of the tax year concerned." A company's IR35 obligations for a tax year therefore depend on accounts whose filing deadline had already passed before that tax year even started.

The test runs over two consecutive financial years. A corporate client is medium or large-sized only if it meets the criteria for two consecutive financial years. Crossing a threshold once does not move you.

Put those together and the arithmetic falls out. The earliest a financial year can begin under the new thresholds is 6 April 2025. For a standard twelve-month accounting period, the earliest filing deadline for that year falls in January 2027. The first tax year that begins after such a deadline has passed is 2027/28, which starts on 6 April 2027. HMRC's manual reaches the same conclusion: "the earliest tax year the transitional provision will impact a client is 2027/28. This is because the earliest possible filing date for an accounting period beginning on or after 6 April 2025 is in January 2027." The detail is set out in HMRC's Employment Status Manual at ESM10006A.

There is a transitional provision that softens the two-year test. When assessing whether the two consecutive years are met, the new thresholds can be applied to the earlier year as well, even though that year began before April 2025. In HMRC's own worked example, a company with a 30 June year end becomes small under the new thresholds for 2025-26, the transitional provision treats the preceding 2024-25 year as small too, the two-year requirement is satisfied, and the company leaves the off-payroll rules for the 2027/28 tax year. The provision works in the other direction as well: it can stop a growing company being pulled into the rules by breaking the two-consecutive-years chain.

So the effect is real, and it is coming. It is simply not here yet, and for most clients it will arrive in 2027/28 or later depending on their year end and filing behaviour.

Why the April 2026 date is circulating

Several advisers, umbrella providers and contractor sites have published April 2026 as the date these thresholds change. If you have seen that, it is worth understanding why it is wrong rather than just taking a different date on trust.

There are two causes, and they are worth separating because one of them is not really an error at all.

Stale analysis from before HMRC clarified the position. In early 2025, when the threshold uplift was fresh and HMRC had not yet published its guidance, professional bodies and law firms worked the lookback through themselves and landed on April 2026 as the earliest possible date. The ICAEW's February 2025 note said the change would have no practical impact for off-payroll working "until April 2026 at the very earliest (April 2027 in most cases)". Stevens & Bolton reached a similar view, writing that businesses "will not see the impact of the changes until at least 6 April 2026".

Neither was careless. Both correctly identified that the prior-year lookback delays the effect, and the ICAEW explicitly flagged 2027 as the realistic outcome for most companies. What has changed since is that HMRC has settled the question, and its published position is 6 April 2027 at the earliest for everyone, not a range starting in 2026. Analysis written before that clarification has simply been overtaken, and a good deal of later coverage has repeated the earliest-case date without the "at the very earliest" qualifier that made it defensible.

Confusion with a genuine April 2026 reform. From 6 April 2026, new PAYE rules apply to labour supply chains that include umbrella companies, moving PAYE responsibility onto the agency or end client in the chain. That is a substantial change affecting inside-IR35 contractors, and it does land in April 2026. It has nothing to do with the small company thresholds, but the two changes are frequently discussed in the same breath.

If you are being advised to act on an April 2026 basis, ask which of the two changes is meant, and whether the advice predates HMRC's guidance.

The 14,000 figure, and what it does not mean

You will see a figure of roughly 14,000 companies attached to this change. It is worth being precise about where it comes from, because it is routinely described as an HMRC off-payroll statistic and it is not.

The number is a Department for Business and Trade estimate, published in the impact assessment for the regulations. Table 14 of that document puts the medium-to-small reclassification at 14,000 companies, to the nearest thousand, alongside 113,000 small companies becoming micro and 6,000 large becoming medium. DBT counted it to size the savings on accounting and audit obligations. It is a Companies Act reclassification estimate.

Two consequences follow. First, the unit is companies, not contractors. Because a single reclassified client can engage many contractors, the number of contractors eventually affected is larger, and nobody has published a figure for it. Second, the government has not quantified the off-payroll knock-on at all. Any number you see presented as "contractors affected by the IR35 threshold change" is somebody's inference, not an official estimate.

What this means for you in practice

If your client is currently medium or large

Nothing changes yet. They remain responsible for your determination and for issuing a Status Determination Statement, and they carry the liability, through the whole of 2026/27. Do not accept an argument that responsibility has already moved to you.

If your client is close to the new thresholds

They may become small for off-payroll purposes in 2027/28. That would move the determination, and the liability, onto your own company. This is the case worth planning for now, because it is a transfer of risk to you rather than a saving. Check their last filed accounts on Companies House against the £15 million and £7.5 million figures, and note their financial year end, since that drives when the change bites for them specifically.

If your client will not tell you its size

You are not dependent on goodwill here. Section 60H of ITEPA 2003 gives the worker, or the party the client contracts with, the right to ask the client to state whether in its opinion it qualifies as small for a specified tax year, and the client must respond.

The deadline is the later of 45 days from the date the client receives the request, and 45 days before the start of the tax year the request is about. So a request made well in advance of a tax year does not oblige an answer until 45 days before that year begins.

If the client does not respond in time, the duty is enforceable through the courts. HMRC's guidance puts it plainly: the requestor "can apply to the courts for an injunction (or an order for specific performance in Scotland), requiring the client to provide the information". In practice the existence of the right is usually enough to get an answer, and a written statement of size is worth having on file either way, because it evidences the basis on which you assessed your own status.

One thing this right does not do is decide the question. A client's statement is its opinion, and the statute frames it that way. If the client is wrong about its own size, the underlying facts still govern who carries the determination and the liability, so a statement is useful evidence rather than a safe harbour.

If your client is already small

Your position is unchanged. You have always been responsible for your own determination under Chapter 8, and you carry the liability. The threshold uplift does not affect clients that were already inside the exemption.

If you receive a determination you disagree with

You have the right to dispute it while your client is still the responsible party. Under the off-payroll working rules the client must respond within 45 days, either confirming the decision with reasons or reversing it. Contractors significantly underuse this process. Once responsibility transfers back to you, that route disappears, because there is no longer a client decision to challenge.

An outside determination is also not permanent. It covers the contract in question and should be reviewed on each renewal or material change in working practices. The Autoclenz principle, established in Autoclenz Ltd v Belcher [2011] UKSC 41, means tribunals look at the reality of the working relationship rather than what the contract says.

The CEST problem hasn't gone away

While your client is still the responsible party, many will use HMRC's CEST tool to make the determination. CEST has known structural limitations: it ignores Mutuality of Obligation entirely, and Freedom of Information data released by HMRC shows it produces an undetermined result in approximately 22% of cases, a figure that has risen consistently since the tool launched.

That matters more, not less, as responsibility moves back toward contractors. When you become the responsible party you will be tempted to reach for the same tool, and it has the same blind spots when you use it as when your client did. For a full explanation of why CEST can diverge from a tribunal, see is CEST accurate.

The action list

The useful work here is preparation, not reaction. Before 2027/28:

1. 1

   Check your client's last filed accounts on Companies House against the £15 million turnover and £7.5 million balance sheet figures, and note their financial year end.

2. 2

   Work out roughly when the change would bite for them, using the filing deadline of the first financial year beginning on or after 6 April 2025.

3. 3

   Ask for a written SDS now if you do not have one, while your client is still obliged to provide it.

4. 4

   Review your contract against the six IR35 dimensions rather than just personal service and control, so you know your position before the liability becomes yours.

5. 5

   Do not rely solely on CEST, whoever is running it.

Contractors who take on self-assessment responsibility for their IR35 status carry retrospective HMRC investigation risk for up to six years. What an HMRC IR35 investigation actually costs sets out the scale of that risk, and it is the main reason a threshold change that sounds like good news is not straightforwardly good news for contractors.

Frequently asked questions

When do the IR35 small company threshold changes actually take effect?

The Companies Act thresholds rose for financial years beginning on or after 6 April 2025. For off-payroll working, HMRC's position is that there is no practical impact until 6 April 2027 at the earliest, because a client's size for a tax year is judged on a previous financial year and the test runs over two consecutive years.

Is there an April 2026 IR35 threshold change?

No. Nothing happens to the small company thresholds in April 2026. A separate reform does take effect on 6 April 2026, when new PAYE rules apply to labour supply chains involving umbrella companies, but that is a different measure and does not affect the small company exemption.

What is the small company exemption for IR35?

If your end client qualifies as a small company, meeting at least two of not more than £15 million turnover, not more than £7.5 million balance sheet total, and fewer than 50 employees, then you as the contractor are responsible for your own IR35 determination rather than the client, and you carry the liability.

How do I know when my own client will be affected?

Find the first financial year they began on or after 6 April 2025, then find the filing deadline for those accounts. Their size for off-payroll purposes changes from the first tax year that starts after that deadline has passed. For a standard twelve-month year the earliest that can be is the 2027/28 tax year.

Does the change mean my client stops issuing Status Determination Statements?

Eventually, if they become small. Until then they are still required to provide one and you are still entitled to it. If a client claims they no longer need to issue an SDS because of the threshold change, check their filed accounts and their financial year end, because on HMRC's own timetable that is unlikely to be correct before 2027/28.

Can I challenge an inside IR35 determination?

Yes, while your client is the responsible party. They must respond within 45 days, either confirming the decision with reasons or reversing it. If they fail to respond, the liability shifts back to them. Once responsibility passes to your own company there is no client determination to dispute.

Sources and further reading

• ·HMRC: April 2025 Employer Bulletin (states there is no practical off-payroll impact until 6 April 2027 at the earliest)
• ·HMRC Employment Status Manual ESM10006A: size-threshold changes (the lookback rule, the two consecutive years test, the transitional provision and worked examples)
• ·The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024
• ·Department for Business and Trade: Impact Assessment for those regulations (source of the 14,000 medium-to-small reclassification estimate, Table 14)
• ·HMRC: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026
• ·Section 60H ITEPA 2003: duty on client to state whether it qualifies as small
• ·HMRC Employment Status Manual ESM10011A: requesting confirmation of a client's size
• ·ICAEW, February 2025: Changes to size thresholds for off-payroll working
• ·Stevens & Bolton: The increase to the small company thresholds for off-payroll working rules
• ·HMRC: Understanding off-payroll working (IR35)
• ·HMRC: Status determination statements guidance
• ·HMRC: Check Employment Status for Tax (CEST)
• ·Companies House: Find company information
• ·Autoclenz Ltd v Belcher [2011] UKSC 41
• ·ContractorUK: CEST undetermined rate FOI data