Lack of outside IR35 roles remains top concern for contractors

IR35 has emerged as the single biggest concern for contractors, more so than fears over tax rises, artificial intelligence and even ill health, according to new research.

Survey data released by Qdos show that concerns about the off-payroll working rules continue to dominate the contracting workforce, despite (or perhaps, in spite of) the rollout of the private sector reforms nearly five years ago.

Outside-IR35 opportunities in short supply

The poll of over 600 contractors found that just over one in four respondents (25%) believe a lack of outside-IR35 contracts poses the single biggest threat to their businesses.

A further 24% said their main concern is simply finding new sources of contract work in 2026.

Tax rises still a major worry

These concerns ranked above fears of further tax increases (22%) and cost-of-living pressures (9%).

Dividend tax rates are set to increase by 2 percentage points from April 2026, just three years after a major hike in Corporation Tax. Many fear that this dividend tax increase, in particular, may be followed by further increases.

Only 6% cited being unable to work due to illness as their biggest worry, and just 4% viewed the rise of AI and automation as their primary threat.

Why IR35 still dominates contractor thinking

IR35 was introduced in 2000 to prevent individuals working through their own limited companies from operating as so-called “disguised employees”, whereby they would benefit from a then sizeable tax gap between working through a company and working as an employee.

Since the off-payroll reforms were extended to the private sector, responsibility for determining a contractor’s employment status has shifted from the individual to the client.

In practice, this shift has had a dramatic effect on the contracting market. Many contractors report fewer outside-IR35 roles, alongside the continued use of blanket bans on limited company hires due to client caution.

Calls for reform reversal remain strong

Beyond IR35, survey respondents also raised concerns about late payment and the wider political climate.

When asked what they wanted the government to prioritise, a majority (54%) called for the reversal of the IR35 reforms, underlining just how damaging the off payroll legislation has been for contractors.

Qdos CEO Seb Maley answered some of our questions earlier today:

Have things become easier for clients since 2021?

Things haven’t necessarily become easier since the roll out of reform in the private sector, but overall, businesses are in a much better position to manage these rules – by that, I mean carry out fair, well-informed IR35 determinations that allow genuine contractors to operate outside the clutches of IR35.

For contractors, are blanket bans on limited companies still common?

In our experience, far too many businesses take the view that contractors all need to be engaged on the payroll. Now, technically, this isn’t always a non-compliant blanket assessment, given the business decided to stop working with contractors altogether – insisting that they all need to operate via umbrella companies instead.

But of course, you still encounter non-compliant approaches, where genuine contractors are all placed inside IR35 irrespective of status – but this is much less common. That being said, there’s still some way to go before this practice is stamped out.