Spring Budget 2024: Freelance IT workers hope against hope for IR35 off-payroll repeal

The IMF may have thwarted what IT freelancers say they want Spring Budget 2024 to contain – a tax cut in the shape of IR35 reform repeal.

In comments credited to its chief economist, the IMF said Jeremy Hunt must focus on March 6th 2024 on “fiscal consolidation.”

Decoded, Pierre-Oliver Gourinchas’ comments mean that the IMF is against Hunt adding to the £20billion in cuts he made in November.

‘Too early’

But the chancellor rebutted the IMF, reportedly saying “it is too early to know whether further reductions will be affordable in the Budget.”   

Yet Hunt has since said “it doesn’t look” as if there is “the same scope for cutting taxes” on March 6th as there was at Autumn Statement.

“So I need to set people's expectations about the scale of what I'm doing”, Hunt continued last week on a BBC podcast.

“When a Conservative government cuts taxes, we will do so in a responsible and sensible way.”

The chancellor heeding the alert of the International Monetary Fund (IMF), in spite of his rebuttal, may seem ‘responsible’ and ‘sensible.’

But as many as EIGHT tech contracting experts which Free-Work quizzed yesterday, implied that a responsible, sensible chancellor would actually just axe IR35 reform outright.

‘Enhance the freelance economy’

Rich Wilson, CEO of Gigged.AI says repealing the 2017/2021 off-payroll working (OPW) rules would “enhance the freelance [tech] economy”.

In a proposal which Wilson told Free-Work he has now sent to both the Scottish and UK governments, Gigged.AI asks Hunt to be “pragmatic”.

The Recruitment & Employment Confederation (REC) said yesterday a “complete overhaul” of the “complex” OPW rules was “overdue.”

“With nearly half the UK working population working in a non-permanent, flexible way, we need a tax system to reflect this,” Kate Shoesmith, REC’s deputy CEO told Free-Work.

The Association of Professional Staffing Companies says it would back IR35 reverting for all IT contractors (and their engagers) to its pre-April 6th 2017 framework.

‘Freelance tech landscape is challenging’

Yet it’s not just recruitment bodies like APSCo and REC, but individual, respected agencies which want Hunt to step in on IR35 too.

Morgan Mckinley, a financial services recruitment firm says the new rules have made the IT freelance landscape “challenging.”

Kieran Scully, speaking from the firm’s London HQ told Free-Work: “IT contractors [we place on assignment] emphasise [to us] the need for regulatory reforms…to foster a more supportive working environment.

“[So] ideally, contractors would like to see a reassessment or removal of the IR35 off-payroll working rules”. 

‘Personal Service Company workers forced onto on-payroll, inside IR35’

In agreement is VIQU, a Birmingham-run technology staffing company.

“Since April 6th 2021, [we’ve witnessed ‘bogus’ employment in the private sector] whereby PSC workers get forced onto on-payroll contracts, inside IR35.

“[So if Hunt doesn’t act next month] …the thriving UK contractor market faces a [constant] threat,” warned VIQU boss Matt Collingwood.

‘Love’

Sixth to tell Free-Work that scrapping IR35 reform at Spring Budget is a sure-fire way to boost IT contracting, was niche jobs agency boss Natalie Bowers. 

The Bowers Partnership owner says IT contractors she places at the Square Mile’s investment management firms would “love” the OPW rules revoked. 

The eight-strong line-up calling the chancellor to recall his October 2022 decision to cancel the rules’ repeal is completed by two individual, yet highly experienced IT contractors.

‘PAYE Contractor model spawned by OPW ought to be outlawed’

With 20 years’ experience in software development, contractor Chris Sebok told Free-Work: “A roll back of OPW in the private sector would be ideal.

“At the very least, I’d like the government to seriously consider outlawing the new ‘PAYE Contractor’ employment model that OPW has spawned.

“OPW is single-handedly responsible for me personally now having to take a permanent job after 16 years as a contractor-consultant.

“Outside [IR35] contracts are few and far between, and I wouldn’t touch an inside [IR35] contract with a bargepole.”

‘Shake HM Treasury by the throat’

The founder of Shadow Moses Developments, Sebok’s stance on IR35 was supported by a former service management contractor.

“Twenty odd years on, and I’m still angry about IR35 [of 2000] and its successor [frameworks],” said the former contractor, Alan Watts.

With a 40-year tech career under his belt, Watts continued to Free-Work: “In the light of Kaye Adams’s [IR35] case and [other tax] iniquities…I would love to see someone shake HM Treasury by the throat, and tell them the four million independent professionals are not there to avoid paying taxes; they are there to provide the flexibility and skills that an economy that’s trying hard to recover and grow desperately needs.”

‘Pipedream’

But hinting that they know they’re asking Hunt to do the undoable; Watts; Sebok, VIQU and Bowers Partnership all said the chance of IR35 reform getting redlined on March 6th is slim.

Sebok called it a “pipedream”; Watts said there’s “little chance;” and Bowers “predicts absolutely zilch on IR35.”

At VIQU, a downbeat, resigned-sounding Matt Collingwood echoed:

“As for IR35 [reform], I think the UK stands a better chance of adopting the same tax-free system as the UAE or Monaco, as we do of abolishing it. Unfortunately.”

‘Burdensome’

Yet in a sign that dislike of the OPW rules now transcends the IT contractor sector, a political party is joining the hope against hope that Spring Budget 2024 axes IR35 reform.

In its manifesto document for 2024’s to-be-diarised UK general election, Richard Tice’s Reform UK pledges to: “Abolish the burdensome IR35 rules”.