What constitutes a medium or large entity for IR35?
A corporate entity will be medium or large-sized if it meets at least two of the following criteria for two consecutive financial years:
- Turnover of more than £10.2 million
- Balance sheet total (assets) of more than £5.1 million
- An average of more than 50 employees
An entity’s size, based on the rules above, applies for the duration of a tax year for the purposes of Chapter 10, Part 2 ITEPA 2003.
Corporate entities (companies; limited liability partnerships; overseas companies and unregistered companies). Limited liability partnerships, overseas companies and unregistered companies are classed as ‘relevant undertakings’ in the legislation. The rules for corporate entities apply equally to entities classed as relevant undertakings.
Qualifying criteria for the Small Companies Regime can be found from section 382 Companies Act 2006 onwards.
A corporate entity will cease to be medium or large-sized if it no longer meets at least two of the above criteria for two consecutive financial years.
