What is a small or medium-sized company?

The Companies Act 2006 provides the classification sizes of companies, which include small, medium, and large. If a company is not classified as small, it must take into account the off-payroll legislation and IR35 reforms.

The three parameters are in Section 382(3):
https://www.legislation.gov.uk/ukpga/2006/46/section/382

The qualifying conditions (to be small) are met where the company satisfies two or more of the following requirements:

1. Turnover not more than £10.2 million
2. Balance sheet total not more than 5.1 million
3. Number of employees not more than 50

It is essential to know when your company technically becomes affected by the IR35 legislation.

From an off-payroll perspective, when a company moves from being small to medium or large, this doesn't mean that the new rules may apply overnight. There are timing provisions in place, giving the company time to adjust to the new regime.

The off-payroll legislation applies to medium and large companies in the UK, so it is crucial to establish the size of your business and check whether the rules apply.