What’s afoot with IR35 and will Spring Statement 2025 change OPW?

IR35 consultancy manager Matt Tyler speaks up on the big OPW issues, in his warm-up to the only March speech in London Town worth reserving tickets for.

What’s happening with IR35?

And will Spring Statement 2025 on Wednesday March 26th change the off-payroll working rules?

Both are good questions, and both are questions I’ll answer here — partly for two limited company contractors who approached us asking what IR35 looks like in 2025, just as tax year 2025-26 comes into sight, writes Matt Tyler, IR35 consultancy manager at Kingsbridge.

A key speech for the contractor industry is next month. Rachel Reeves is speaking too

Before I tackle the two questions, including whether chancellor Rachel Reeves will address off-payroll rules in her address next month, a sort of humblebrag. I will next month make my own live address, as I’m one of three key event speakers at the 8th Annual IR35 Conference.

Apologies; that’s three ‘addresses’ in one paragraph. I hope you’re still with me!

Join some IR35 heavyweights (and me) at the Danubius Hotel

Anyway, do come and find me on Thursday March 20th in London’s Danubius Hotel, where I’ll be on the IR35 panel with FCSA’s Chris Bryce and Bloomsbury Publishing’s Sharon Marshall. IR35-savvy staffing advisers like Colin Morley, former director at Hays, and Tom Hadley, former director at the REC, are speaking too. With this much IR35 nous in one room, it’s an event not to miss.

Let’s get to the two central questions. First:

What’s happening in 2025 with IR35?

In a sign that the Off-Payroll Working (OPW) rules aren’t going anywhere, HMRC has confirmed to us (an IR35 insurer) that the small company thresholds will change for off-payroll working purposes.

The change will apply, in practice, from April 6th 2026.

One answer to ‘What’s happening with IR35?’ is therefore that the parameters to be exempt from the April 6th 2021 changes to IR35 — by qualifying for the ‘IR35 small company exemption’ — will change from next tax year.

What else is happening with IR35 in 2025?

In  April just gone, the IR35 offset was introduced to enable tax and NI paid by an inside IR35 contractor to be deducted from those sums which a ‘deemed employer’ faces from HMRC.

It’s fair to say that this offset mechanism under the OPW rules is still bedding in.

HMRC contracted-out guidance (has a hidden message)

No doubt also whirling its way through the system, too, is HMRC’s December 2023 ‘contracted out’ guidance which another force for good in recruitment, APSCo, was instrumental in making happen to bring more clarity to off-payroll working placements.

Is the contracted-out guidance, like the IR35 offset, a sign that the framework governing IR35 off-payroll working is here to stay? Most probably.

January 2025 saw new IR35 case law

There’s another big happening in the IR35 space.

We IR35 policy wonks have a new piece of case law to pour over in the shape of Bryan Robson Ltd v HMRC.

Unusually, the case ended mainly yet not entirely in a win for HMRC. Heard in November 2024 resulting in a ruling published just last month (January 2025), Robson’s battle with the Revenue went on for a number of years. That’s not new when taxpayers battle IR35 inspectors. What is new is that the case introduced a concept yet to be resolved —  image rights and IR35.

More ‘Nots’ and ‘Wases’ than you can shake a stick at…

The tribunal Robson went before to get his IR35 status determined found that the said-image rights in his case were NOT subject to employment income, even though the rest of the engagement (although not all the years HMRC wanted), WAS one of employment.

Interestingly for Media, Digital, Brand, Marketing, Design, Sports, Leisure, Sponsorship and Tech contractor recruitment circles, while the income earned from the “image rights” was NOT considered employment income, the fact that Robson’s client Manchester United Football Club had those rights, WAS deemed to be a factor towards employment.

PGMOL, Red meat, and chancellors’ feet

Arguably an even bigger IR35 development from HMRC and us who defend contractor taxpayers from its assessments are the updates it just this month made to its Employment Status Manual, in wake of ‘PGMOL.’

As those updates are even more of a delight for us IR35 policy wonks, I’ll now get straight to the red meat. Namely, will Reeves upend off-payroll working at her second fiscal statement?

Before chancellors get to their feet, there are often calls for the Intermediaries legislation (of 2000) and the OPW rules (including the public sector’s April 6th 2017 framework) to be axed.

Personally, I don’t think these hopes are realistic for Spring Statement 2025.

Just last month, Exchequer Secretary to the Treasury James Murray provided 1.8 billion reasons why the government wants to keep OPW exactly where it is.

Spring Statement spoiler: HMT only just said OPW reforms are proving effective…

Liberal Democrat MP Max Wilkinson teased out an interesting reply from the Treasury a little beforehand, in late November 2024. It speaks volumes about how the new-ish Labour government regards the IR35 OPW rules.

A Treasury minister told Wilkinson:

“The off-payroll working reforms have proved effective in reducing non-compliance. [My emphasis].

“As well as preventing tax non-compliance, keeping the reforms in place [my emphasis] also protects around £1.5 billion a year of government revenue, which supports strong public finances and helps fund our vital public services.”

The axe doesn’t tie in (anywhere)

Also, the IR35 ‘happenings’ I’ve outlined above — ranging from the small company threshold changes to the February updated ESM, further confirm policymakers’ intentions. And axing IR35 just doesn’t sit within those.

However, it’s certainly conceivable that peripheral changes to off-payroll working might materialise at Spring Statement 2025, given the sheer greyness of the legislation.

To reiterate, I suspect IR35 as a mechanism won’t budge on March 26th.

The legislation and the reform of it in 2017/2021 closes a necessary loophole.

The framework to tackle ‘disguised employment’ will therefore stay under Reeves.

The devil you know…

And maybe the chancellor retaining the rules we assist agencies and contractors to navigate, since their introduction almost four years ago (private sector); almost eight years ago (public sector) and almost 25 years ago (Intermediaries legislation), is preferable to something new, but something suspiciously like IR35/OPW being cobbled together in a rush, just to show the government is listening.

That said, anything that addresses the still significant administrative burden of IR35/OPW compliance will certainly be supported by the contractor industry.

IR35 tweaks at Spring Statement 2025 are a half-prospect

To score a few political points, such ‘tweaks’ from the chancellor to IR35 or OPW are a half-prospect. But I don’t think Reeves will ‘do a Truss’ — wrongfoot us all, and attempt to change the OPW legislation significantly.

Under pressure to achieve economic growth, respond to a City that wants ISAs pared back, and of course edit her LinkedIn profile, the chancellor won’t want a repeat of the infamous September 2022 mini-budget. It was Liz Truss’s undoing. That U-turn on OPW was scrapped not too long afterwards, and an IR35 U-turn for Reeves at this stage just looks and feels too bold.

So it may get a mention, or perhaps a bit of tweaking at Spring Statement 2025 but IR35 — a framework introduced by a Labour government — looks to have quite a rosy future.

TL;DR: Don’t ditch your IR35 insurance

The off-payroll working rules will continue to be an important weapon in HMRC’s armoury way after March 26th. If I change my mind, I’ll tell you on March 20th  — before Spring Statement at the 8th Annual IR35 Conference. Told you it’s one not to miss.

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.

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To find out more, get a quote or contact us today.