Rachel Reeves turns down ‘repeal IR35 reform’ opportunity

MP Rupert Lowe tells Kingsbridge IR35 reform must be abolished, despite the Chancellor ducking his ask that all contractors return to deciding their own IR35 status. 

Labour has rejected an opportunity to signal it wants to repeal the IR35 off-payroll working (OPW) rules. 

Kingsbridge says the rejection means that, ahead of Autumn Budget 2025, IR35 reform “as a concept now won’t be going anywhere, anytime soon”. 

The IR35 insurer’s comments came after a minister was asked if Labour would make it party “policy” for contractors to decide their own IR35 status again. 

‘IR35 reform must be scrapped’ 

Asked in the House of Commons by independent Great Yarmouth MP Rupert Lowe, the question was put to His Majesty’s Treasury (HMT). 

Fresh from founding the “Restore Britain” movement, Mr Lowe spoke yesterday to Kingsbridge, insisting that IR35 reform “must” be scrapped. 

Formerly of Reform (which itself has pledged to “abolish” IR35), Lowe in effect asked HMT if it would reinstate the IR35 proposal of mini-Budget 2022. 

‘Truss-Kwarteng revoke IR35 reform pledge blindsided many’ 

The then-Chancellor Kwasi Kwarteng announced that workers operating via an intermediary would “once again be responsible for determining” IR35 status. 

Kingsbridge IR35 Consultancy Manager Matt Tyler last night recalled the vow from September 2022, made under the Liz Truss-led Tory government. 

Tyler said it “blindsided many, contractors and advisers – due to its suddenness”. 

‘Enable contractors to determine their own IR35 status’ 

Kwarteng’s successor at the Treasury, Jeremy Hunt, U-turned the vow just three weeks later, on October 14th 2022. 

Lowe’s under-the-radar question in the Commons offered Labour an opportunity to support revoking IR35 reform without ‘blindsiding’ anyone. 

But the government has now rejected the opportunity.  

Asked by Lowe on May 30th 2025 if Chancellor Rachel Reeves “will make it her policy to enable contractors to determine their own IR35 status”, a Treasury minister replied: 

“As a result of the reform [to IR35], HMRC estimate an additional £4.2bn has been received in tax revenues, overall, in the period October 2019 to March 2023.” 

‘Labour silence on repealing IR35 off-payroll working rules is perhaps understandable’ 

The answer of June 9th 2025 contains three additional paragraphs. 

But none of them directly answer Lowe’s central query, and all imply support for the OPW framework.  

The government’s full answer, provided by the Treasury’s Exchequer Secretary James Murray MP, is available on the Off-payroll Working ‘Question for Treasury’ page. 

Ryan Dawson, IR35 Project Manager at Kingsbridge, says: “The government has technically remained silent on whether they would scrap the OPW framework.  

“With Finance Bill 2026 due, the Employment Rights Bill imminent, and Single Worker Status on the ‘too-difficult’ pile, maybe the silence is understandable. 

“After all, you can’t get into trouble for not saying anything! But backers of axing IR35 reform, who want ‘old’ IR35 left in its place, will be disheartened.”  

‘Scrapping IR35 reform will be a significant campaign for Restore Britain’ 

However, Mr Lowe sounds undeterred.  

Despite the effective ‘no’ answer from HMT to his question of whether IR35 reform is to be repealed, his objection to the OPW rules is set to increase.  

Sounding defiant, the MP yesterday told Kingsbridge:  

“We must scrap IR35 [reform]. [And] I hope to make [scrapping it] a ratified Restore policy. This will make a significant campaign.” 

‘New IR35 is clearly not going to be old news anytime soon’ 

But Alan Lowdell, a recruitment agency Finance Manager from March 2016 (just before public sector OPW) until June 2024 (way after private sector OPW), is unmoved. 

“The only politicians of substance who ever repealed the rules were Liz Truss and her then-Chancellor”, Lowdell began in a statement to Kingsbridge. 

“With Jeremy Hunt then reversing it, and nobody in HMT since suggesting anything different, ‘new’ IR35 is clearly not going to be ‘old’ news anytime soon. 

“Furthermore, given that Restore Britain is [a members’ organisation and] not a political party, an ‘axe IR35 reform policy’ from them doesn’t feel significantly relevant. 

“If Reform adopted this ‘axe OPW policy’, which [leader Nigel] Farage intimated it would at the election, it would be more significant.  

“However, four-plus years is a very long time to wait in politics.” 

‘Reform now may promise to repeal IR35’ 

Without sight of Lowdell’s comments, a veteran IT contractor last night arrived at the same conclusion. 

Alan Watts, who freelanced as a technologist for three decades and supported PCG (now IPSE) when it first formed to abolish IR35, told Kingsbridge: 

“To steal back the march from Restore, Reform now may promise to repeal IR35. 

“So did [former Conservative Chancellor] George Osborne – until he was in office.  

“But if Reform is serious, we have at least five years before that happens. By then, the contract workforce – a hugely important and badly needed pool of workers – will be dead and buried.” 

‘Revisit what Truss and Kwarteng were actually trying to do at mini-Budget 2022’ 

Lane Clark, a financial analyst, took to LinkedIn last month to ask whether the “Truss-Kwarteng Budget” was a “missed opportunity”. 

“Growth, incentive, dynamism – all things we now desperately need”, wrote Clark, Co-Founder at TPP.  

“What we witnessed wasn’t policy failure. It was a confidence crisis. 

“And now? We’re back to slow growth, high tax, and economic stagnation dressed up as ‘prudence’. 

“Maybe it’s time we revisit what Truss and Kwarteng were actually trying to do.” 

‘Scrapping OPW rules would have likely generated billions in tax revenue’ 

Teodora Dimitrova, Director and Owner at Chart Accountancy, says the 2022 pledge to scrap IR35 reform was “absolutely necessary” for the UK economy. 

Ahead of a Kingsbridge Blog exclusive by Dimitrova on why the government should reinstate a repeal of IR35 reform, she said: 

“The decision of Kwarteng and Truss to scrap the off-payroll working rules was 100% correct. 

“It would have likely generated billions in tax revenue through growth and new opportunities. 

“But now, because [former Prime Minister and Chancellor Rishi] Sunak and then Labour ignored IR35, many skilled contractors in London and across the rest of the UK are struggling to find and then retain high-rate contracts, with offers increasingly being offshored instead.”  

‘Many contractors still say no to “inside IR35” roles’ 

Mark Kitchen, a director at executive-level recruiters Williams Bain, said when they read “inside IR35”, “many” job candidates “still say no.”  

“As someone who works closely with interim leaders every day, I hear it time and time again. ‘The role looked great… but it was “inside” IR35’. And just like that, the opportunity falls flat.” 

In a social media post, Kitchen continued: “According to IPSE, 31% of freelancers have turned down roles because of IR35 status. 

“That’s almost a third of highly skilled professionals walking away – not because of the day rate, the challenge, or the company. But because the compliance setup doesn’t work for them.” 

‘Tax revenue raised under IR35 reform isn’t actually owed in the first place’ 

By contrast, the revised Intermediaries Legislation is working very nicely for the Treasury’s coffers. 

A former service management consultant, Watts explained last night: “IR35 was a badly conceived and poorly implemented law when it was first introduced. 

“Various governments have tried to make it work, and mainly succeeded in making it worse.  

“The fact that it persists as we approach 2026/27 is down to the Treasury, which has persuaded successive Chancellors that it is bringing in a lot of tax income.  

“The reality is that [under the OPW rules], because firms have taken the easy way out and refused to deal with independent [limited company] contractors, that tax revenue is not actually owed in the first place.” 

‘HMRC has convinced politicians of IR35’s millions, if not billions’ 

Formerly of Gattaca, owner of tech staff agency Matchtech, Lowdell agrees. 

“Due to some changes in the Employment Rights Bill, particularly around guaranteed hours and day-one rights, it is possible that some engagers who are risk-averse to OPW may decide to revisit those blanket bans. 

“In many cases, these OPW-induced decisions were made in error, purely for [the avoidance of HMRC] risk.  

“But for the most part, the taxman has convinced politicians that IR35, in whatever guise, generates millions, if not billions, of previously unpaid tax and NI. 

“And until anyone can disprove that, the government won’t be making any changes.  

“The one exception is the new definition of a ‘small company’, which will see more companies from April 2027 claim exemption from OPW, in which case the contractor’s limited company will make the IR35 status determination.” 

‘Treasury reply indicates 4.2billion reasons why OPR is likely to remain’ 

At Kingsbridge, a sympathetic-sounding Mr Dawson reflected: “Without support, clients can really struggle with IR35. 

“And there is no doubt that [the reform of IR35] has led to ‘blanket bans’ and, in turn, a generally downward trend of genuinely self-employed workers.  

“Like us internally, many of our partners believe the OPW rules should be looked at closely, with a view to simplifying them. So it’s pleasing that Reform and Restore are applying pressure to ensure the revised IR35 framework is given the scrutiny it needs.  

“However, as Labour appears to be finding out, when you’re in opposition, it’s much easier to talk about the things you would do than when you’re in government and are faced with actually doing them. And as James Murray MP’s response to his fellow MP Rupert Lowe suggests, there are 4.2billion reasons why OPW is likely to remain on the statute book for the foreseeable.” 

Getting IR35 support

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