IR35 Repeal: How it's changed the market

It’s been a few weeks since the IR35 repeal was announced in the Government mini budget and like most recruitment professionals, I’ve already had 100's of conversations with clients and contractors about the what the changes will mean for the contracting market. It’s a huge topic right now, as we prepare for what these reforms mean for businesses and contractors alike.

The Reform and the Repeal

The IR35 reform was introduced into the public sector in 2017 and the private sector in 2021. Both reforms caused a huge amount of upheaval in the contractor market. Initially the reforms were introduced as a way of tackling tax avoidance across the UK market, however many contractors felt like they were being unfairly treated and the reforms led to a reduction of work for them.

Despite the vast amount of money pumped into the reforms, the chancellor announced that from April 2023 the IR35 legislation would be repealed. This means that contract workers across the UK will once again be responsible for determining their IR35 status and will bare the burden of responsibility for paying the correct tax and NI contributions

Market Insights:

We’ve already seen a growth in contractor numbers since the announcement. Those that became disillusioned after IR35 changes came into effect last year and moved into permanent roles are returning to the contract market in their droves. The increase in contractors means that the demand in some of the key areas is now being met. As companies will no longer be competing to engage with candidates in a talent shortage we may see that the rates on offer begin to fall after they’ve sky rocketed over the last year.

More candidates have stated that they’re flexible for short term inside IR35 contracts. Many are seeing April 2023 as "D-Day" and have decided that they are happy taking on short term IR35 contracts until April comes - at which point they’ll be returning to outside IR35 engagements. Although we don’t know what will happen come April, few are willing to commit to inside engagements past this date as they want to keep their options open.

?It's not just contractors who are changing their stance, some companies are already making U-turns. Those that were previously scared away by the legislative changes and the risk attached have already revised their stance on hiring contractors and are now actively recruiting in this space. The chancellors mini-budget has given them the opportunity to engage in flexible, specialist on-demand services once more.

The next steps

It’s important to remember that IR35 has not disappeared, and contractors will be responsible for ensuring they make the correct determination under IR35.

There are still plenty of questions yet to be answered and the organisations I’ve spoken with are now in the process of ensuring their business is ready for the changes come April.

As a company, Jumar are working with our clients and candidates to minimise the uncertainty of these changes. We’re continuing to provide up to date information and working with a team of specialists to help companies navigate the IR35 changes.