IR35 vs 1099: A Plain-English Guide for Cross-Border Hiring
If you're hiring contract engineers in both the UK and US, you're dealing with two entirely different classification systems, and getting either wrong has real financial consequences.
IR35 (UK): who decides if you're "inside" or "outside"
IR35 is the UK's test for whether a contractor is genuinely self-employed or effectively an employee in all but name. Since 2021, it's the hiring company that makes this determination for most medium/large clients.
- Outside IR35: genuine autonomy — controls how work gets done, can send a substitute.
- Inside IR35: taxed like an employee, even though technically a contractor.
Getting this wrong can leave the hiring company liable for backdated tax and penalties.
1099 (US): a different question entirely
The US question is whether someone is an independent contractor (1099) or should legally be a W-2 employee, based on control, tools, and whether the arrangement is project-based or ongoing.
What this means in practice
Placements are structured around the country the work is delivered to, not a copy-pasted template. Payment runs through Wise Business for cross-currency simplicity.
This is a general overview, not legal or tax advice.
If you're navigating this for an upcoming contract hire, get in touch.