November 2025 – With the Autumn Budget scheduled for 26th November, speculation is mounting about whether the Chancellor will announce measures affecting IR35 and off-payroll working rules, though industry experts suggest substantial reform remains unlikely.
Budget Date Confirmed, IR35 Changes Uncertain
The government has confirmed the Autumn Budget will take place on 26th November 2025, but no official announcements have been made regarding specific IR35 reforms or changes to the off-payroll working framework.
Industry observers rate the probability of IR35 being mentioned in the Budget as low, with some experts suggesting only a 30% chance the off-payroll working rules will feature in the Chancellor's statement at all.
This reflects the government's consistent position throughout 2025 of defending the current IR35 framework by citing substantial tax revenues generated rather than signalling appetite for reform.
What's Already Changing
Several confirmed changes affecting contractors came into force in April 2025, independent of any Budget announcements:
Small company threshold increases raised the financial criteria for small company classification. Companies now qualify as small if they meet two of three tests: turnover under £15 million (previously £10.2 million), balance sheet under £7.5 million (previously £5.1 million), or fewer than 50 employees (unchanged).
These threshold changes mean an estimated 14,000 businesses moved from medium to small classification. However, due to the two-year qualification rule, the practical impact on IR35 responsibility won't be felt until April 2027 at the earliest.
Employer National Insurance increases saw the rate rise from 13.8% to 15%, whilst the threshold at which employers begin paying NICs dropped from £9,100 to £5,000 annually. These changes took effect in April 2025.
For contractors operating inside IR35 or through umbrella companies, these NI changes directly impact take-home pay unless rates can be renegotiated to compensate.
Areas Where Reform Might Occur
Industry bodies and contractor organisations have identified several areas where Budget changes could potentially benefit contractors, though none have been confirmed by government:
Employment status simplification has been discussed, with suggestions the government might address the disconnect between tax employment status and employment law status. However, previous consultations on this issue in 2018 and 2022 led to increased complexity rather than simplification.
Umbrella company regulation reforms are expected from April 2026, with the government planning to address what it describes as widespread non-compliance practices in the umbrella sector. Full legislative details have not yet been published.
Double taxation offset mechanisms introduced in April 2024 provided some relief where both contractors and clients paid overlapping tax. Further refinements to these mechanisms could be announced, though no proposals have been made public.
HMRC enforcement clarity around status determinations and what constitutes compliant assessments remains an area where guidance could be strengthened, particularly regarding blanket inside IR35 decisions.
Industry Calls for Reform
Various industry voices continue pressing for IR35 reform or repeal in the lead-up to the Budget.
Contractor representative bodies have documented ongoing challenges with the off-payroll working rules, including reduced contract availability, lower earnings, and contractors leaving self-employment. Research indicates large majorities of contractors view current government tax policy as detrimental to business performance.
Business organisations have highlighted administrative burdens created by the off-payroll working rules, with major trade bodies calling for simplification of compliance requirements.
Some accountancy professionals and policy experts have called for complete repeal of the 2017 and 2021 reforms, arguing the current system is fundamentally flawed and cannot be fixed through minor adjustments.
Think tanks across the political spectrum have identified IR35 as a barrier to entrepreneurship and flexible working, with some describing it as the greatest obstacle to self-employment in Britain today.
Government Position Remains Unchanged
Despite industry pressure, the government has consistently defended the current IR35 framework throughout 2025, emphasizing tax revenues generated by the reforms.
Treasury responses to parliamentary questions about IR35 have repeatedly cited figures showing billions in additional tax collected since the reforms were introduced, making clear the off-payroll working rules are viewed as an important revenue source.
This focus on fiscal responsibility and revenue protection suggests any Budget changes would more likely involve refinements to implementation rather than fundamental reform or repeal.
Employer NI Impact May Shift Dynamics
The April 2025 employer National Insurance increases have had unintended effects on contractor engagement patterns. Higher employment costs for permanent staff have made outside IR35 contractors comparatively more attractive to some businesses. Industry reports suggest increased demand for genuine off-payroll arrangements as companies reassess workforce structures in light of higher NICs.
This market shift could feature in Budget discussions, particularly if the government seeks to address contractor supply and demand imbalances created by the NI changes.
What Contractors Should Watch For
While substantial IR35 reform appears unlikely, the Budget could potentially include:
- Technical adjustments to how the off-payroll working rules operate in practice, such as enhanced guidance or modified compliance procedures.
- Changes to tax rates affecting contractors, including corporation tax, dividend tax, or Income Tax bands that indirectly impact contractor take-home pay.
- Further umbrella company regulation details, with implementation timelines and specific compliance requirements.
- Small business tax measures that could affect contractors operating through limited companies, including changes to expense rules or allowances.
- Announcements about employment status reviews or consultations, even if actual legislative changes are deferred to future budgets.
Preparing for Uncertainty
With the Budget date confirmed but IR35 specifics unclear, contractors and businesses face continued uncertainty about the regulatory landscape.
Industry advisers recommend contractors review their current arrangements regardless of Budget outcomes, ensuring contracts properly reflect working practices and that IR35 status assessments remain accurate. Businesses engaging contractors should assess whether recent small company threshold changes affect their classification and resulting IR35 responsibilities, even though the two-year rule delays practical impact.
Both contractors and clients operating under the off-payroll working rules should monitor Budget announcements closely, though expectations for major IR35 reform should remain modest given government positions expressed throughout 2025.
Realistic Expectations
Industry experts suggest contractors should prepare for continuity rather than change. The political sensitivity around IR35 following 2022 events, combined with government emphasis on revenue protection, makes substantial reform unlikely regardless of industry pressure.
More probable are technical adjustments, enhanced guidance, or measures addressing specific implementation problems rather than wholesale changes to the underlying framework.
For contractors hoping the Autumn Budget will resolve longstanding IR35 challenges, disappointment seems likely. The government has shown no indication throughout 2025 that it views IR35 reform as a priority, making 26th November an unlikely turning point.
Note
that
his article reflects speculation and industry commentary about potential Budget measures. No official government announcements about IR35 changes in the Autumn Budget 2025 have been made. Contractors should await the actual Budget statement on 26th November for confirmed policy positions.
