Compliance
IR35 for Couriers: Tax Status at the Depot
IR35 for couriers decides if a contractor is employed for tax. Medium and large clients must issue a status determination statement and take care.
19 April 2024 · Zerity editorial team
IR35 for couriers applies when a driver works through an intermediary, such as a personal service company, and would be an employee for tax if that intermediary were removed. HMRC's off-payroll rules put the status decision on medium and large clients. A small client leaves it with the intermediary.
Reviewed 25 September 2026. This is general information about tax status at a depot, not advice on a particular contract. Rates and company-size tests change. Use the HMRC pages linked below.
A driver who is genuinely self-employed, with no company in between, is not an IR35 question. Holiday pay, National Minimum Wage and worker status are covered in employment status for self-employed couriers.
- When IR35 applies to a courier
- Who decides, and what you file
- What IR35 does not decide
- Frequently asked questions
When IR35 applies to a courier
IR35, the intermediaries legislation, targets engagements where services are provided through a third party such as a personal service company. The question is whether, if you ignore the company, the driver would be an employee of the client for tax purposes.
That is a tax test. It does not decide employment rights. A self-billing invoice does not decide it either. Self-billing is a VAT method for who raises the invoice. It is explained in HMRC self-billing for couriers and on the invoicing page. Read the contract and the working practices, then use HMRC's tool.
HMRC provides Check Employment Status for Tax (CEST). Enter the actual contract and the way the work is done, including substitution, control and whether the depot is a client of the driver's business. Keep the output with the decision. HMRC's own status guidance still expects the client to take reasonable care. A tool result is not a substitute for that care.
Who decides, and what you file
HMRC's off-payroll working rules have applied to public-sector clients since 6 April 2017 and to medium and large private-sector clients since 6 April 2021. HMRC's guide for clients is the starting point. The practical split for a depot is:
| Client | Who decides | What the depot files |
|---|---|---|
| Public-sector body | The client | A status determination statement, passed to the worker and to any third party you contract with |
| Medium or large private client | The client | The same statement: the decision, the reasons, and evidence that reasonable care was taken |
| Small private client | The worker's intermediary, under the original intermediaries rules | No off-payroll statement from the depot. The worker can ask you to confirm that you are small |
HMRC's status determination statement guidance says a valid statement includes the decision (employed or self-employed for tax), the reasons, and reasonable care. If the statement is not valid, HMRC says responsibility for deducting tax and National Insurance can remain with the client. Pass the statement to the worker and to the party you contract with. There is no set format. An email the worker can actually open is enough, if it contains those points.
Company size, including the 2025 threshold change
A private client is outside the off-payroll duty while it is small on HMRC's test. The Companies Act size limits rose for accounting periods beginning on or after 6 April 2025. HMRC's Employer Bulletin for April 2025 says a company is small for those periods if it meets two of these three: turnover not more than £15 million, balance sheet total not more than £7.5 million, and no more than 50 employees.
The same bulletin says the change has no practical effect on off-payroll working until 6 April 2027 at the earliest, because size is judged on an earlier accounts year. HMRC's employment status manual ESM10006A explains that timing. Do not treat a depot as newly small in the 2026/27 tax year only because the Companies Act figures have risen. Read the manual for the year you are in.
Where the off-payroll rules apply and the decision is "employed for tax", the client or the deemed employer operates PAYE, including Class 1 National Insurance. Which class that is, and what a truly self-employed driver pays instead, is in National Insurance for self-employed couriers. The wider HMRC links are on the HMRC guides page.
What IR35 does not decide
IR35 does not award holiday pay, sick pay or the National Minimum Wage. Those follow employment status, not the intermediaries legislation. Do not use an "outside IR35" note as a reason to skip a right to work question or a pay-status question.
IR35 also does not follow from the payment method. Self-billing a driver does not place them outside IR35. Paying them by the drop does not place them inside it. The working practices and the contract do.
Zerity can store the status decision, the date and whether PAYE applies, on the driver file. It does not run CEST, it does not calculate a deemed payment, and it does not file a return to HMRC.
Frequently asked questions
Does IR35 apply to couriers?
It applies when a courier works through an intermediary and, if the intermediary were removed, they would be an employee for tax. Genuinely self-employed drivers with no intermediary are an employment-status question, not an IR35 question.
Who issues the status determination statement?
The client, if it is a public body or a medium or large private client and the off-payroll rules apply. The statement needs the decision, the reasons, and reasonable care. A small client does not take that duty. The worker's intermediary then considers the original IR35 rules.
If we self-bill a driver, are they outside IR35?
No. Self-billing is a VAT invoicing method. It does not decide tax status. Read the contract and the working practices, use HMRC's CEST tool, and file the result with the reasons.
Written by
Zerity editorial team
The Zerity team writes about fleet management, compliance, and scaling logistics businesses, drawing from hands-on experience helping UK courier companies streamline operations.
