From April 2025, big changes are coming to IR35 — and they’re going to impact how we hire and work across the Building Services Engineering space. Whether you're running projects and hiring staff, or you're a contractor in the thick of it, these changes matter.
So, what's changing?
The UK government is adjusting the thresholds that define a ‘small business’.
Here’s the new criteria from April 2025:
•Turnover: up to £15 million (was £10.2m)
•Balance sheet total: up to £7.5 million (was £5.1m)
•Employees: 50 or fewer (unchanged)
Now here’s the important bit:
A business only needs to meet two out of the three criteria for two consecutive financial years to be classed as a small company. So if you have 40 employees and turnover £10 million, but your balance sheet sits at £8 million — you’d still qualify as small. That classification matters, because...
IR35 responsibility shifts
Under current rules, medium and large companies are responsible for determining whether a contractor falls inside or outside IR35. From April 2025, many consultancies and contractors will find themselves in a new setup:
✅ The contractor becomes responsible again
✅ The client gets flexibility back
✅ But everyone still needs to stay sharp
Note: These rules apply from April 2025, but become enforceable from April 2026 — because size is based on accounts from the previous year.
For clients:
If your business now qualifies as small, you're no longer the one making the IR35 status call. That means:
✅ Less red tape
✅ More freedom to bring in experienced contractors
✅ Less risk of getting tangled in HMRC investigations — if you get it right
But don’t get too relaxed. You’ll still need watertight onboarding processes, clean contracts, and the right recruitment partner.
For contractors:
The decision-making power is back in your hands. You’ll need to determine your IR35 status — and you’ll carry the tax risk if HMRC disagrees with your assessment. That means:
•Know the rules
•Get your contracts reviewed
•Be honest about working practices
Freedom comes with responsibility. Don’t sleepwalk into it.
What this means for Building Services Engineering
Contracting is the backbone of our industry. It’s how projects get delivered on time when things get tight. With IR35 relaxed for smaller firms, the agility returns — but only for those who understand the shift.
Need support navigating this?
Whether you're hiring or contracting — Elev8 Engineering has your back. We provide fully compliant, high-impact contract staff across the UK and US. Our network is deep, our process is sharp, and we move fast. Looking for your next project or needing trusted interim talent? Let’s elevate your team.
📩 DM us or reach out directly to start the conversation.