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Four out of five contractor job providers say the off-payroll working rules still catch most technology roles.
The IR35 offset for the off-payroll working rules is having little to no effect on the volume of outside IR35 IT jobs, Kingsbridge can reveal.
Four out of five contractor tech job sites say they still place far fewer outside IR35 roles than inside IR35 roles, the IR35 insurer found.
The IR35 offset was introduced by HMRC on April 6th 2024 to head off ‘double-taxation.’
‘Deemed employer’
Double-taxation occurred when, upon quashing an outside IR35 decision, HMRC charged the ‘deemed employer’ extra NICs and income tax without factoring in taxes already paid by the contractor’s PSC.
It meant that end-clients were presented with (and HMRC ended up collecting) a surplus tax demand that wasn’t technically, lawfully due.
The hope was that a mechanism to both stop engagers from receiving such inflated tax bills and offset the bill against the PSC’s payments would encourage more outside IR35 opportunities.
‘No IR35 status shifts’
But placing IT contractors in London’s Square Mile, Bowers Partnership says January 2025 set against January 2024 saw “no shift” in IR35 statuses.
“Inside IR35 remains the default,” the agency’s Natalie Bowers said yesterday to Kingsbridge.
“January 2025 – nine months post-offset, is near-identical to January 2024 – three months pre-offset, in terms of inside-outside IR35 split.”
‘More than six in 10 inside IR35 in Q1’
VIQU IT said yesterday that 62% of its IT contractor jobs in January-March 2024 were inside IR35.
Inside IR35 contracts at the tech recruitment agency fell to 52% in April-to-June 2024 – the quarter that the offset applied from.
But the proportion of the agency’s temporary IT roles caught by the Off-Payroll Working rules rose to 56% in Q3.
And in October-December 2004, the tech staffing outfit’s stock of inside IR35 jobs soared to 71%.
‘IR35 offset hasn’t had any real impact on outside IR35 roles’
“We have not had one client bring up the offset, or increasingly engage [on an outside IR35 basis] due to it,” VIQU told Kingsbridge.
“So we don’t think that [the April 6th 2024 mechanism] has had any real effect on outside versus inside IR35 assignments.”
Data from two IT contractor job giants to show the inside-outside split pre-and-post the IR35 offset’s application was not directly available.
‘TotalJobs and CV-Library share of outside IR35 roles stands at 43% and 41%, respectively’
But the two giants, TotalJobs and CV-Library, said the majority of their temporary tech jobs are caught by the off-payroll roles too.
Advertising 140,000 UK jobs, Totaljobs said 43% of its jobs are on an outside IR35 basis, compared with 57% on an inside IR35 basis.
CV-Library, the UK’s largest independent job site, says that out of its roles with “IR35” in the details, 41% are outside, and 59% are inside.
‘Inside IR35 job postings on Indeed.com have reduced by 36%’
The fifth IT contractor jobs provider approached – Indeed.com – gave the only sign that the IR35 offset may have had the widely desired effect on tech assignment status.
“The share of job postings referencing ‘inside IR35’ is down 36% in January 2025 against January 2024,” Indeed’s senior economist Jack Kennedy told Kingsbridge.
Kennedy cautioned that the 36% decrease is based on a keyword-based analysis that he ran of job descriptions live on Indeed.com.
‘UK jobs market decline’
But he also said the dip in inside IR35 job ads would be higher – “50%” – if the “decline” in the UK labour market was factored in.
And market matters most according to Matt Collingwood, boss of VIQU IT, which has offices in Southampton and Birmingham.
“We believe the percentages [relating to the IR35 status of our roles] are simply a reflection of market conditions.
“For example in Q4 2024, we had more Business-As-Usual (BAU) assignments.
“BAU jobs lean more toward being inside IR35 [than project-based assignments],” he says. “Deliverables are harder to define on BAU.”
‘IR35 offset mechanism strongly interested agencies, initially’
Despite more than seven in 10 tech roles via VIQU being inside IR35 in October-December 2024, the first three-month period when the offset was introduced saw its stock of inside IR35 roles fall to 52% (from 62% in the previous quarter).
Although the stock has never since improved (and even that ‘peak’ means most of VIQU’s tech jobs in Q2 were still inside the OPW rules), Kingsbridge’s Kate Robinson offered a possible explanation:
“From talking with recruitment partners, our IR35 insurance business found that agencies initially showed strong interest in the offset mechanism from HMRC.
“Their initial belief was that the reduced tax risk might encourage end-clients to engage contractors on an outside IR35 basis.
“And while we did see a handful of clients open up to reassessing their stance on contractor hiring, [today, and upon reflection], the majority remain unchanged.”
‘IR35 — complex, subjective, and evolving’
Asked why a resurgence in outside IR35 hiring didn’t emerge, Robinson – Kingsbridge’s head of partner solutions – answered, but emphasised it was just her view.
“The combination of complex tax legislation, the subjective nature of IR35, and the evolving case law surrounding IR35 mean; I think, that few clients are equipped to navigate these issues,” she said.
“Fortunately, there is a clear appetite to engage with contractors compliantly, yet the complexity and ambiguity of the OPW rules lead most clients to avoid doing so unless absolutely necessary.”
‘Large number of clearly not outside IR35 roles’
Kingsbridge began probing inside-outside IR35 job volumes when a subscriber to an ‘Outside IR35 Roles Only’ service complained.
Taking to the service’s LinkedIn page, the subscriber wrote:
“Given the [large] number of roles listed here that are quite clearly not ‘outside IR35,’ I’m really not sure of the value of this anymore.”
‘Glitch’
In response last month to the complainant, a freelance Java Developer, the service claimed there had been a technical “glitch.”
The glitch was said to have stopped some job statuses from updating.
A similar service promising ‘Only Outside IR35 Roles’ last week shared a role advising that outside IR35 status, “may be available.”
Both services are yet to respond to Kingsbridge’s requests to comment.
‘Off-payroll working rules offset not a game-changer’
Bowers Partnership boss Natalie Bowers reflected last night to Kingsbridge: “The off-payroll working rules offset is a footnote, not a game-changer.
“With today’s rate-poor, candidate-rich market, there’s no sign of that shifting anytime soon. The hope that HMRC’s IR35 offset would restore balance has been wishful thinking – at best. Unfortunately, right now for limited company contractors, clients hold all the cards – including the one marked with ‘I-R-3-5’ – and they know it.”
How Kingsbridge can help
Navigating IR35 legislation and ensuring compliance can be challenging for contractors and businesses alike. Kingsbridge offers tailored support, including expert guidance on IR35 status assessments, compliance strategies, and risk mitigation. Our team is dedicated to helping contractors and businesses understand and adapt to the evolving tax landscape.
Kingsbridge also offers a range of flexible business insurance options to support contractors, including Professional Indemnity, Public Liability, and Employers’ Liability cover, as well as add-ons like Cyber Insurance and Director and Officer’s Liability.
To find out more, get a quote or contact us today.
Simon Moore, Managing Director at Moore News Ltd
Simon Moore is a journalist with NCTJ-approved journalism training, who has worked inside the newsrooms of local, consumer and national media titles.
He today writes news and features for trade publications specialising in freelancing, small business and the self-employed. Simon’s articles have been linked to by The Daily Telegraph and the biggest newspaper website in the world, MailOnline. He was appointed to be a judge at IPSE Freelancer’s Awards 2023.
