If you’re a freelancer in the creative world — whether you’re a designer, videographer, editor, sound engineer, animator, copywriter, or anyone making magic behind the scenes — you’ve probably heard the term IR35 whispered like a creative curse word.
And for good reason.
It’s one of the trickiest, most misunderstood pieces of tax legislation in the UK, and it has a big impact on how freelancers structure their work, get paid, and plan their tax.
In this blog, we’ll break down exactly what IR35 means for creative freelancers, how it affects day-to-day working, and what you should be doing to stay on the right side of HMRC.
IR35 exists to identify when someone is working like an employee, even if they invoice through a limited company.
HMRC calls this “disguised employment” or off-payroll working.
In plain English:
If you behave like staff, but you’re paid like a contractor, HMRC may say you should be taxed like an employee.
For creatives, this matters because clients often want to bring freelancers “in-house” for long projects… without hiring them as employees. That’s where IR35 comes in.
Creatives often work:
All of these can make you look like an employee rather than a genuinely independent business.
Agencies and production companies are particularly cautious now, which is why you’ve seen more inside IR35 contracts appearing across the sector.
Since April 2021, the rules changed:
If your client is a “small business” under Companies Act thresholds, you (the freelancer) still carry the responsibility.
So:
Creative agencies that are small, boutique studios, micro-production houses… many fall into this category.
If your contract is inside IR35:
In other words:
You still operate through your limited company, but the tax is taken care of before the money arrives, much like a payslip.
You’re taxed like an employee, but you don’t get holiday pay, sick pay, pension, or employment rights.
Inside IR35 is basically PAYE without the perks.
Outside IR35 means HMRC agrees you are a genuine independent business.
Your limited company invoices in the normal way, and you decide how you extract the money (salary, dividends, etc.).
Your tax bill is usually lower than inside IR35, and you keep the flexibility and independence that comes with being a freelancer.
HMRC doesn’t always care what your contract says.
They look at what actually happens in real life.
The core tests:
Who decides how, when and where you work?
If the client dictates it, that leans towards employment.
Could you send someone else to do the work?
Genuine businesses can. Employees can’t.
Is the client obliged to give you ongoing work, and are you obliged to accept it?
If yes, that’s employee-like.
Creatives often tick more of these boxes than they realise.
Especially with big agencies or broadcasters.
Inside IR35 means PAYE, so less flexibility.
Many freelancers now operate hybrid portfolios.
Inside IR35 income has to be handled correctly to avoid double taxation.
Clients sometimes tighten control, push you through payroll companies, or refuse to deal with PSCs entirely.
Make sure they reflect a genuine business-to-business relationship.
Avoid long, open-ended roles with fixed hours.
Use your own equipment, branding, insurance, processes.
Be careful about:
These all support genuine self-employed status.
Especially when a client confirms “outside IR35.”
Because IR35 is rarely clear-cut and your industry is unique.
Yes, IR35 has made life harder for freelancers.
But in the creative industry — where flexibility, innovation and project-based work are the norm — you still have plenty of room to operate outside IR35 if your working practices support it.
The key is understanding the rules, structuring your business properly, and working with clients in a way that protects your freelance status.
If you’re unsure how IR35 affects your specific setup, I can help you review your position and plan the most tax-efficient approach for your creative business.