What does the General Election mean for the IR35 reforms in 2024?

With another General Election on the horizon, the political landscape is once again filled with debates, manifestos, and promises. For contractors, the focus is particularly on what this means for IR35 reforms. The situation in 2024 is different from previous years, and there are several new factors to consider.

Reform Party’s stance on IR35

The Reform Party, while not expected to win a significant number of seats, could still have an impact, much like Nigel Farage’s influence in the 2016 Brexit referendum. They have issued a ‘contract with you’ outlining their plans for economic growth and taxation. Notably, they promise to:

• Free over 1.2 million small and medium-sized businesses from corporation tax.
• Abolish IR35 rules to support self-employed workers (although there may be a drafting error here as sole traders are not subject to IR35).
• Reform the tax system to simplify the tax code, which currently exceeds 21,000 pages.

For more information on the proposal to abolish IR35, read our article “Has IR35 been scrapped?”.

Labour Party’s position on employment and self-employment

Angela Rayner of the Labour Party has spoken about introducing a bill within 100 days to reform temporary staffing, gig working, and contracting as part of their “new deal for working people.” These changes would include:

• Basic employment rights from day one for all workers.
• A ban on exploitative zero-hours contracts.
• Moving towards a single status of worker, simplifying employment status distinctions.
• Strengthening rights and protections for self-employed workers, including the right to a written contract and measures to tackle late payments.

While Labour has not explicitly mentioned IR35 in their recent updates, their broader reforms to employment status and protections could indirectly impact the IR35 framework.

Conservatives’ track record and future outlook

The Conservatives have been in power for the past 14 years, overseeing two IR35 reforms and facing criticism for their handling of self-employed workers, especially during the pandemic. Their relationship with the self-employed sector has deteriorated, with promises of reviews into IR35 and Off-Payroll Working (OPW) that have not led to substantial changes.

Historical context: 2019 General Election and IR35

Just when we all thought things couldn’t get any more complicated with British politics, a General Election was called for December 12, 2019. Many contractors hoped this would lead to a delay or cancellation of the IR35 reforms. However, despite the election and the lack of an Autumn Budget, the Treasury confirmed its commitment to implementing the reforms.

Contractors were advised to continue preparing for the reforms, which did indeed come into effect in April 2020. This historical precedent suggests that political changes do not always result in immediate policy reversals.

What should contractors do now?

Given the varied positions of the major parties and the uncertain political climate, contractors should:

• Continue to prepare for the IR35 reforms as planned, regardless of the election outcome.
• Stay informed about political developments, especially party manifestos and policies related to employment and taxation.
• Monitor updates from trusted sources and professional advisers to ensure compliance and readiness for any changes.

The election results may not lead to immediate changes in the IR35 reforms, but staying proactive and informed will help contractors navigate any potential shifts in policy.

For the latest updates and expert opinions, visit our IR35 News page.

Final thoughts

Whether it’s changes to off-payroll working rules or broader tax policies, government decisions can have significant impacts on the self-employed. The Labour Party’s focus on employment rights and the ongoing discourse around IR35 underscore the importance of staying engaged with current political developments. While the immediate future of IR35 remains uncertain, contractors should remain vigilant and prepared for any eventual changes.

Keep up to date with all things IR35 on our blog, and if your contractor insurance is due for renewal, get in touch for assistance.