The Future of IR35 Legislation for Self-Employed Contractors: A 2024 Election Outlook

As the UK gears up for the general election next month, the self-employed contractor community watches closely, for whom the IR35 legislation remains a pivotal issue. Introduced to combat tax avoidance by individuals working as employees, it has faced criticism for its complexity and the burden it places on contractors and businesses alike.

Contractors have been navigating a complex tax landscape under the current IR35 rules. The outcome of this election could determine whether these rules are reformed, simplified, or even abolished, significantly impacting the livelihoods of thousands of contractors and the businesses that rely on them.??

Here's a breakdown of the conversation around the legislation so far in this campaigning period.??

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Conservative Party?

The Conservative Party have been in power for 14 years and were the original architect of IR35. They created two IR35 reforms and have previously promised reviews into the legislation and off-payroll working. Recently, there have been murmurs within the party about the need for a more balanced approach. However, the Conservatives have not yet mentioned if their stance on the legislation will change if they win the upcoming election.?

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Labour Party?

Labour has often positioned itself as a champion of workers' rights and may take a more protective stance towards self-employed contractors.?

Angela Rayner of the UK Labour Party has spoken previously about the prospect of introducing a bill "within 100 days" to shake up temporary staffing, gig working and contracting, as part of its "new deal for working people".?

?These changes would include:??

- Basic day one employment rights for all workers “Our New Deal will include basic individual rights from day one for all workers”?

- A ban on "exploitative" zero-hours contracts (which is the main agency worker and gig worker mode of engagement)??

- Single status of worker?

“We will move towards a single status of worker and transition towards a simpler two-part framework for employment status. We will consult in detail on a simpler framework that differentiates between workers and the genuinely self-employed.”?

- Strengthen rights of the self employed?

“We will strengthen rights and protections to help self-employed workers thrive in good quality self-employment, including the right to a written contract, which for example would benefit freelancers, action to tackle late payments, and by extending health and safety and blacklisting protections to self-employed workers”?

Labours stance on IR35 should become clearer once manifestos are delivered. As their ‘new deal’ will certainly have an impact on the future of temporary resource.??

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Liberal Democrats?

The Liberal Democrats stance on IR35 would likely focus on creating a fair and competitive market. If they win, they are likely to end retrospective tax changes like the loan charge brought in by the Conservatives.?

Daisy Cooper MP has confirmed that the IR35 “scandal”, along with the loan charge issue, would be reviewed under a Liberal Democrat government.?

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Reform UK?

Reform UK have issued a ‘contract with you’ in which they state: “Reform is urgently needed to enjoy a high growth, high wage, low tax economy that is critical for Britain’s future.” Within the first 100 days they will:??

- Free Over 1.2 Million Small and Medium Sized Businesses from Corporation Tax?

- Abolish IR35 Rules to Support Sole Traders (I can only assume this is a drafting error and should instead be something generic like ‘self employed workers’. Sole traders as you know aren’t subject to IR35.)??

- Reform the Tax System – with a tax code of more than 21,000 pages it certainly is complex.?

For self-employed contractors, the election results will shape their professional and financial futures, highlighting the critical need for engagement and awareness as political parties outline their plans for the post-election landscape.?

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