Public sector contracting operates under different IR35 rules to the private sector and has its own distinct culture and requirements. Understanding these differences helps contractors make informed decisions about pursuing government work.
IR35 in the public sector
The off-payroll working rules have applied to the public sector since April 2017, four years before they were extended to the private sector. This means all public sector bodies, regardless of size, are responsible for determining the IR35 status of contractor engagements. In practice, many government departments have assessed the majority of their contractor roles as inside IR35, though some outside IR35 engagements do exist, particularly for highly specialist or project-based work.
Rates and compensation
Public sector day rates are generally lower than private sector equivalents, but this is partially offset by other factors. Contracts tend to be longer, with extensions common in central government and NHS bodies. Many public sector roles offer fully remote working. The combination of stability, remote working, and reasonable rates makes public sector contracting attractive to contractors who value predictability.
Security clearance
Many public sector roles, particularly in central government, defence, and law enforcement, require security clearance. BPSS is the baseline and can be processed quickly. SC and DV clearance take longer but significantly expand your available market and command higher day rates.
Framework agreements
Large public sector bodies typically procure contractor services through framework agreements such as G-Cloud, Digital Outcomes and Specialists, and Crown Commercial Service frameworks. Understanding which frameworks your preferred agencies are listed on helps you identify and access opportunities.
Culture and working practices
Public sector organisations tend to move more slowly than private sector companies. Decision-making involves more stakeholders, procurement processes are more formal, and technology choices may be more conservative. Contractors who thrive in government work are comfortable with structured environments and understand that the pace of change is different from start-ups or fast-moving technology companies.