Chapter 8 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 is the original intermediaries legislation, in force since 6 April 2000. It is the part of IR35 under which the contractor's own personal service company (PSC) assesses its own status and, where an engagement is inside IR35, calculates and operates a deemed employment payment on its own account.
Chapter 8 applies where the end client is small under the small company exemption, or where the client is wholly overseas with no UK connection. In those cases the off-payroll rules in Chapter 10 do not apply, so the responsibility for getting status right (and paying any tax) sits squarely with the PSC, not the client.
The key practical feature that distinguishes Chapter 8 from Chapter 10 is the 5% expenses allowance. When computing the deemed employment payment under Chapter 8, the PSC deducts a flat 5% of the relevant engagement income as an administrative allowance. That allowance is retained under Chapter 8 but abolished under Chapter 10. The statutory anchors are ITEPA 2003 ss.48 to 61, with the deemed payment computed under s.54 and s.58.