Working with freelancers: employment status, IR35 and getting it right
Creative businesses run on freelancers, and the rules on who counts as employed are easy to get wrong. How status is decided, when IR35 applies, and the records that protect you and them.
Crews, designers, editors, writers, developers: much of the creative economy is freelance. The government recognised as much in 2025, when it committed to appointing a Creative Freelance Champion to speak for freelancers inside government. For the businesses that hire them, the practical question is an older one. Is this person self-employed or, for tax, an employee?
How status is decided
There is no single test. HMRC and the courts look at the whole relationship: who controls how, when and where the work is done; whether the worker can send someone else in their place; whether you must offer work and they must accept it; and whether they are in business on their own account, with their own equipment, other clients and something to lose if the work goes wrong. The contract matters, but what actually happens matters more.
Signs that point each way
- Works for several clients
- Decides their own hours and methods
- Can send a substitute
- Uses their own equipment
- Quotes for the job and puts mistakes right at their own cost
- Works mainly or only for you
- You set the hours and supervise the work
- Must do the work personally
- Uses your equipment and email address
- Paid by the hour or day, with no risk
When IR35 applies
If the freelancer works through their own limited company, the off-payroll working rules, known as IR35, may apply. Medium and large clients must decide the worker’s status, tell them the outcome and, if the role falls inside the rules, deduct tax and National Insurance. Small private-sector clients are exempt from those duties: the decision then rests with the worker’s own company. From April 2026, higher company size thresholds mean more businesses count as small.
Use the tool, and keep the record
HMRC’s Check Employment Status for Tax tool gives HMRC’s view based on your answers, and HMRC says it will stand by the result as long as the information you give is accurate and follows its guidance. Save the result, the date and your answers, and run it again if the role or contract changes. If a sole trader freelancer comes out as an employee, they need to go on your payroll.
Paying freelancers well
- Agree the fee, the deliverables and the payment date in writing before the work starts.
- Pay on time: late payment hurts a freelancer more than almost anyone.
- Keep contracts, invoices and status checks together for at least six years.
Sources
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This insight is general information, not advice for your circumstances. Talk to us before acting on it.