IR35: Conservative Party pledge to reform off-payroll rules gets lacklustre response

A pledge by the shadow home secretary, Andrew Griffith, to “look again” at reforming the controversial IR35 disguised employment legislation has received a lacklustre response from contracting market stakeholders.

During a speech at the Conservative Party conference on Monday 6 October 2025, Griffith talked about his want to reignite the country’s spirit of entrepreneurship, saying: “I understand there are far too many hurdles for small businesses to jump [and] red tape that steals away the precious time of those who run them.”

He awent on to pay credit to the self-employed, who he described as “risk-takers” that are “striking out on their own, often with nothing more than a laptop and a belief they can make it work”, adding: “That’s why we commit today to doing better for the self-employed. And that includes looking again at reforming IR35.”

The IR35 legislation, which was originally introduced at the turn of the millennium to clamp down on disguised employment-enabled tax avoidance within contracting circles, was subject to reform by the Conservative government in 2017.

At the time, the changes saw public sector contractors cede control for deciding how they should be taxed to the organisations hiring them out of concern some individuals were mis-representing their employment status to artificially minimise their employment tax liabilities.

For example, contractors were claiming their public sector engagements meant they were working outside of the IR35 rules, meaning they should be taxed in the same way as off-payroll workers, when they were really working inside IR35. The latter designation means individuals should pay the same National Insurance Contributions (NICs) and Pay-As-You-Earn (PAYE) taxes as a salaried employee.

The reforms were later extended by the Conservative government, amid fierce opposition, to the private sector in April 2021. In October 2022, a Conservative government overseen by former prime minister Liz Truss set out plans in a “mini-budget” to repeal the IR35 reforms by April 2023, but this pledge was quickly abandoned 10 days after it was first announced.

Given the Conservative party’s chequered history on overseeing changes to the IR35 legislation, Griffith’s comments about embarking on another reform of the legislation has not been greeted as positively as perhaps the party was hoping.

Seb Maley, CEO of contracting insurance provider Qdos, said the promise of a reform and more support for the self-employed might make for “nice headlines” but “the devil would be in the detail”, adding: “Given how damaging IR35 reform has been for some, this latest pledge will be music to the ears of many freelancers, contractors and consultants – not to mention businesses. Others, though, will need more convincing.

“The fact of the matter is that the Conservatives had countless opportunities to rethink public and private sector IR35 reform, but ploughed on despite efforts across the industry to encourage them to consider the bigger implications. It’s also difficult to overlook the irony. The shadow chancellor is Mel Stride, who was one of the driving forces behind the introduction of IR35 reform under the previous government.”

Dave Chaplin, CEO of IR35 tax compliance firm IR35 Shield, said Griffith’s comments show that the Conservative Party “needs to make up its mind on IR35” after years of flip-flopping on the matter. “They’re calling for reform of the very legislation they created, repealed and reformed,” he said.

And the fallout from the reforms originally coming into force in 2017 is still being keenly felt across the contracting market today. “When the reforms were first introduced, they contained a significant flaw that placed disproportionate tax risk on firms. This led many large organisations to ban contractors altogether, which was never Parliament’s intention,” said Chaplin.

“These market distortions continue to harm both businesses and contractors. Many compliant contractors are now unable to find work and, as a result, are paying no tax, an outcome completely contrary to the policy’s aims. While the reforms sought to curb tax avoidance, the overreach has been substantial.”