Key Information Document IR35: The Essential Guide

Understanding the Key Information Document (KID) under IR35

Since April 2020, the Key Information Document (KID) has been a legal requirement for recruitment agencies in the UK. But what is it, why does it matter—and specifically, how does it interact with IR35? Below, we break down everything you need to know to stay compliant and make smart decisions whether you're a contractor, recruiter or just want clarity in a complex marketplace.

What is the Key Information Document?

The KID is a statutory, pre-contractual document drafted by recruitment agencies. It must be provided to all new agency workers—whether those individuals are paid PAYE, operate via a Personal Service Company (PSC), or are engaged through an umbrella company. In a nutshell:

• Introduced: 6 April 2020 (Regulation 13A of the Conduct Regs 2003)
• Who gets it: Every agency worker, regardless of IR35 status or payment model
• Purpose: Ensures transparency—workers see, in plain English, how their pay is calculated, all deductions, and who is responsible for paying them

Why Does KID Matter for IR35?

IR35 governs tax treatment for contractors. Its impact on pay flows, deductions, and your engagement model means KID is vital in:

• Explaining the difference between inside IR35 (employee-like deductions, higher total costs, often umbrella involvement) and outside IR35 (usually via a PSC, more flexibility but with different risks)
• Outlining all expected deductions (tax, NI, umbrella margin, pension, levy, etc.) based on the engagement
• Preventing misunderstandings or even falling into non-compliance or tax avoidance schemes

"Understanding what you’re really paid—and why—shouldn’t require a magnifying glass. The KID finally lays it out in black and white."

Who Issues the KID—and When?

• The Recruitment Agency is always responsible for the KID. That remains true even if payment or direct employment flows through an umbrella or an individual’s company.
• The document must be issued prior to signing contracts. If any material facts change (pay method, deductions, pay frequency, etc.), the agency must send a revised KID within five working days.
• The KID should be refreshed anytime:
  • You switch from PSC to umbrella (or vice versa)
  • Move inside or outside IR35
  • Start new deductions or bonuses
  • Change payment interval or umbrella company

What Must the Key Information Document Include?

KIDs are designed to be short, clear, and specific. They should:

• Be clearly titled—"Key Information Document"
• Outline your status: PAYE worker, PSC, umbrella-employed, etc.
• Give precise pay details (rates, holiday, payment intervals)
• Itemise all deductions: statutory (tax, NI, student loan, pension) and other (employer NI, umbrella margin, apprenticeship levy)
• Highlight who the actual employer is, and any relationships between the agency, umbrella, or end client
• Provide a transparent breakdown of assignment rate, gross pay, deductions, and net take-home
• Supply a sample pay calculation showing how you arrive at net pay from the contracted rate
• Display EAS inspectorate contact details (for complaints/compliance)

Example KID Pay Breakdown Table

When is a New or Updated KID Needed?

A new or revised KID is needed only if there’s a material change, such as:

• Switching between PAYE, umbrella, or PSC models
• A change in IR35 status on the contract
• Introduction of new deductions or benefits
• A change of umbrella provider, pay frequency, or method

Rest assured: a new KID isn’t needed for every contract unless these facts shift.

KIDs in the Real World: Benefits for Contractors and Agencies

For Contractors:

• Understand, up-front, exactly what you’re going to be paid—and what’ll be deducted.
• Protect against unlawful or confusing deduction schemes
• Avoid non-compliant or risky umbrella arrangements

For Agencies:

• Tick the compliance box—no nasty surprises at audit
• Build trust and differentiate from less transparent competitors
• Reduce the risk of disputes or tribunals

"Too many contractors are left negotiating in the dark. The KID puts terms, deductions, and expectations right up-front—critical for anyone working inside IR35."

Practical Compliance Checklist

• Maintain KID templates for each worker status (PAYE, umbrella, PSC inside/outside IR35)
• Automate issuance and tracking where possible (many compliance software tools now exist)
• Get umbrella company details and deduction methods in advance—clarity here prevents confusion
• Educate your workforce: Make sure your candidates understand the difference between assignment rate and take-home!

Key FAQs About KID and IR35

1. Is a KID needed for all assignments?
   Not for every assignment—only if your payment setup changes.

2. Who’s liable if there’s an error?
   The agency carrying the worker registration.

3. What happens if I don’t get (or give) a KID?
   Agencies risk investigation and penalties. Workers can report issues to the Employment Agency Standards Inspectorate (EAS) or ACAS.

4. Is there a legal template?
   Yes. See gov.uk for templates and worked examples (links below).

Summary Table: When and What to Issue

Resources & Further Reading

• Gov.uk guidance & templates — Key Information Document

Call to Action:

Want more practical advice or a template to get started? Check out the latest compliance guides—and if you’re unsure, talk to a specialist before your next contract!

Staying on top of KID and IR35 compliance isn’t just good practice—it’s essential protection.