On 6 April 2026 the financial thresholds that decide whether your end-client is treated as 'small' for IR35 purposes went up — and roughly 14,000 UK businesses flipped status overnight. If you contract through a personal service company (PSC) into mid-sized builders, facilities clients or local authorities, the question 'who decides my IR35 status?' may have changed for you in that same week. Here is the practical read for UK construction and trades contractors, the SME builders who book them, and the back-office team that has to get it right.
What changed on 6 April 2026
From 6 April 2026 the small-company test thresholds rose: turnover from £10.2 million to £15 million, balance-sheet total from £5.1 million to £7.5 million. The 50-employee headcount limit is unchanged. To qualify as small, an end-client must meet at least two of the three for two consecutive financial years. The change was confirmed in HMRC's policy paper and is summarised in plain English by Kingsbridge and the SMEToday business press.
The practical effect: a sizeable group of UK builders, FM contractors and developer-clients that had been inside the off-payroll rules since the 2021 reforms now fall outside, because they count as small. Where the end-client is small, IR35 status determination has shifted back to the contractor's PSC — exactly as it worked before April 2021.
Important timing wrinkle
Because IR35 size tests look at the previous financial year, most reclassifications won't bite in practice until the 2027/28 contract year. CXC Global and Davidson Morris both flag this. Don't expect 6 April 2026 to have been a hard switch for every contract; expect a year of overlap.
HMRC policy note →For SME builders sitting just below £15m turnover
If your business has been struggling to absorb the administrative cost of being inside the medium/large company rules — issuing Status Determination Statements, defending appeals, holding records — you have now got relief, but with two strings attached.
Three things to check now the new thresholds are in force:
- Confirm with your accountant whether your last two filed accounts pass two of the three tests under the new thresholds — the year-on-year rule still applies
- Review every PSC engagement: are any of them genuinely operating outside IR35, or have you (and they) been sitting inside since 2021 because it was simpler? The new freedom is also a new exposure if HMRC later re-tests
- Tell your existing PSC contractors in writing — Kingsbridge's 2026 commentary is consistent that contractors who don't know their end-client has flipped to 'small' are the ones most likely to mis-state their own status on their next tax return
For PSC contractors taking the determination back
If you have been working inside IR35 because your end-client treated you that way, the new rules give you back the determination — but also the responsibility. You will need a defensible IR35 status assessment for each engagement, not a copy-paste from your last assignment. The CEST tool, a paid third-party assessment, or evidence from contract clauses, working practices and substitution rights all matter. Davidson Morris and Greenberg Traurig both flag that HMRC has clearer guidance on how it will look at newly-shifted engagements.
The other 6 April 2026 change worth knowing about: new joint-and-several-liability rules for umbrella companies (a separate post for separate readers). The short version: if you are routed through an umbrella company, your supply chain may be quietly restructuring around you. Ask your agency now.
For trades on PAYE through a labour supplier
For sparks, plumbers, multi-trades and labour on weekly PAYE through a labour-supply agency, the IR35 changes don't directly apply — you are already PAYE, IR35 only governs disguised employment via PSCs. The reason this matters: the noise around IR35 may push some of your contemporaries into PSC structures they don't fully understand, and may push others off PSC and onto PAYE. Both are legitimate. Neither is automatic.
“The cleanest way to avoid IR35 doesn't involve a status determination at all. It involves not being a deemed employee in the first place — either genuinely outside, or genuinely PAYE.”
How Kirk Group sits in this landscape
Kirk Group operates a PAYE labour-supply model: vetted construction, electrical, plumbing and project trades placed onto site as PAYE workers, with tax and NI deducted at source, weekly pay, and the agency holding the insurance pack. That deliberately keeps every operative out of IR35 territory. Our SME builder clients don't issue SDSs for our supply because there is no PSC to assess. Whether they became 'small' on 6 April 2026 or stayed 'medium', the outcome with us is identical: we handle the payroll compliance and the building runs to programme.
For PSC contractors who would prefer to drop the admin and move to PAYE for one or more weeks of work — for example to cover a quiet period or to test a longer engagement — Kirk Group can place you on weekly PAYE alongside whatever direct PSC work you keep on the side. Many of our long-tenure operatives do exactly this.
Timeline: what changed and what's still ahead
- February 2026: accounts year-end reviewed and new size status confirmed
- March 2026: PSC contractors written to with their new status
- 6 April 2026: thresholds came into force; new umbrella JSL rules also began
- First contract review post-April: collect evidence and confirm any PSC engagements are genuinely outside
- 2027/28: most reclassifications will start affecting practice
Related Kirk Group services
Detailed CIS April 2026 changes — see our existing blog for sole-trader sparks and plumbers. MTD ITSA quarterly filing guide — kirkgroup.uk. Cor 24/7 emergency plumber and electrician for Derby/Derbyshire — cor.kirkgroup.uk. Kirk Group Handyman recruitment in Derby — handyman.kirkgroup.uk/careers. Kirk Group Cleaning recruitment across the Midlands — cleaning.kirkgroup.uk/careers.
Take the IR35 question off your desk
Kirk Group places vetted UK construction, electrical, plumbing and project trades onto site on weekly PAYE — keeping every engagement clear of IR35, CIS and MTD ITSA admin. SME builders get a single supply contract; contractors get weekly pay with the back-office handled.
Published by Kirk Group Editorial
More Articles