Compliance
Compliance Essentials: What Every Entity Should Know About IR35 & Apprenticeship Funding Eligibility
Two recent compliance updates—the expanded IR35 framework and changes to apprenticeship unit funding rules—underscore the importance of stay-informed governance for businesses and individuals alike.
By NomadicTax Research Team • 5-8 min read • August 29, 2026
## Understanding IR35 in the UK
The **Intermediaries Legislation (IR35)** targets arrangements where individuals provide services through intermediaries (like personal service companies) but, in practice, work as employees. It ensures PAYE and NICs are properly applied.([gov.uk](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm405990?utm_source=openai)) While no new IR35 reform was announced in the past month, apprenticeships funding rules have been updated to clarify eligibility around IR35 status. This makes close monitoring essential.
## Apprenticeship Unit Funding Rules – Key Changes from 1 August 2026
Details below are from the latest rules under **Apprenticeship unit funding** (August 2026 to July 2027) from the Department for Education.([gov.uk](https://www.gov.uk/government/publications/apprenticeship-unit-funding-rules-2026-to-2027/apprenticeship-unit-funding-rules-august-2026-to-july-2027?utm_source=openai))
- **Working under IR35**: learners who are working under IR35, unless also office holders, are **not eligible** for apprenticeship funding. If someone qualifies as an employee under IR35 rules, the provider cannot receive funding for their apprenticeship unit.([gov.uk](https://www.gov.uk/government/publications/apprenticeship-unit-funding-rules-2026-to-2027/apprenticeship-unit-funding-rules-august-2026-to-july-2027?utm_source=openai))
- **Employment status definitions clarified**: rules are tighten for those who are self-employed or sole traders; specific roles like directors/persons of significant control with no separate employer relationship are excluded.([gov.uk](https://www.gov.uk/government/publications/apprenticeship-unit-funding-rules-2026-to-2027/apprenticeship-unit-funding-rules-august-2026-to-july-2027?utm_source=openai))
- **Other clarifications** include funding eligibility related to not duplicating training already undertaken, commitments on work hours in England, and exclusion of apprentices on the Erasmus+ scheme (from 2027) and skills bootcamps as funded units.([gov.uk](https://www.gov.uk/government/publications/apprenticeship-unit-funding-rules-2026-to-2027/apprenticeship-unit-funding-rules-august-2026-to-july-2027?utm_source=openai))
## Action Steps for Entities and Individuals
- **Audit current apprenticeships**: Examine whether current apprentices and trainees are under IR35 arrangements—if so, funding may need adjustment or renegotiation to ensure compliance.
- **Adjust contract terms if eligible**: If you wish to maintain eligibility, you may reconsider how supervisory relationships or contract wording aligns with IR35 definitions or whether roles become “office holders”.
- **Communicate with training providers**: If apprenticeship funding is part of workforce development plans, ensure providers are aware of the updated rules and that individual learners meet the employer/employed status requirements.
- **Monitor legislative updates**: As IR35 remains a complex area, future case-law and guidance may reinterpret criteria like “control” or “supervision”. Entities should maintain solid documentation of working practices.
## Practical Case
> A tech startup wants to hire a ‘contractor’ to deliver training to its internal team and have this person also undergo apprenticeship accreditation. Under new rules, if the trainer operates under IR35 (i.e. treated as an employee for tax), they **cannot** receive apprenticeship funding unless they are an “office holder”. If not an office holder, the startup may either reclassify them contractually or look for alternative funding paths.
**Bottom line:** IR35 status now impacts much more than just PAYE/NICs. Ineligible funding, penalties, or unexpected liabilities can result unless compliance is proactively managed.