IR35: IT contractors ‘most concerned about off-payroll working rules’

Contractors have confirmed to ContractorUK what a new Qdos study shows — the Off-Payroll Working rules (OPW) are the rub of IT contracting in 2026.

But there is nuance around contractors' frustration with the OPW rules.

In force since April 6th 2017 and 2021 in the public sector and private sector, respectively, the rules make clients responsible for IR35 status determinations.

'Lack of outside IR35 opportunities'

Having polled 600 freelancers, the Qdos study found that a "lack of outside IR35 opportunities" as a result of the rules is the main concern.

It was a concern voiced by 25% of the freelancers polled.

The 25% represented the biggest group to vent to the IR35 contract review firm about a single issue, ahead of finding work (24%), and tax hikes (22%).

'Contractor clients haven't got the Outside-IR35-is-safer message'

Shown the Qdos findings yesterday, IT contractors confirmed that a shortage of temporary roles that aren't "Inside IR35" is indeed a top challenge so far this year.

A contract business analyst, Elaine Richardson, told ContractorUK: "I agree. A lack of outside IR35 work is the single biggest issue for freelancers in 2026.

"Despite the changes to law, like the April 2024 offset, which mean that 'Outside IR35' is now safer for clients, they don't seem to have got the message."

'Blanket bans result in no work at all for PSCs'

Among the IT contractors yesterday, the consensus was that bans on limited company workers — another consequence of the OPW rules — is an additionally grave threat.

"I do disagree slightly on what [my fellow] contractors are saying," braved a Linux specialist, Ken Davis.

"Blanket bans [are worse as they] simply bypass [any] IR35 [status assessment whatsoever].

"So…from my perspective, outright bans on limited company contractors, resulting in no [work at all for PSCs]… are the biggest threat."

'Limited company bans diminish the viability of running your own business'

A contract programmer director, Steve Strain, implies that PSC bans and a dearth of B2B jobs are the one-two punch of the OPW rules.

"After 18 years of contracting, I was forced to take an inside IR35 role, and that was due to risk-averse, often misguided corporate policies [like] blanket bans," he told ContractorUK.

"The [risk posed by blanket bans] of being totally out of work… [means the] viability of running your own small business diminishes day-by-day."

'Inside IR35 dents take-home pay by up to 30%'

Seb Maley, CEO of Qdos, says even those organisations accepting of Personal Service Company (PSC) workers, albeit on an Inside IR35 basis, subject them to much steeper tax rates.

In a statement sent to ContractorUK, Mr Maley said: "Freelancers and contractors are telling us loud and clear that IR35 is their number one concern.

"More specifically, these fears stem from businesses making them work on the payroll without a fair assessment of their employment status.

"[And] being forced onto the payroll by their clients…[is] something which can see them pay anywhere between 20-30% more in tax."

'Knock-on effect of illness on contractor income'

According to the Qdos study, one in 10 freelancers is concerned about the "cost of living" in 2026, positioning it as the fourth biggest issue.

Six per cent worry most about "not being able to work due to illness, and the knock-on effect this would have on their income."

Separately, four per cent of the respondents said the rise of AI and automation was their key concern as a freelancer in 2026.

'Boards' misplaced enthusiasm for Artificial Intelligence'

Richardson, a BA, is sympathetic. "[My] second biggest risk…is boards' enthusiasm for 'AI' without them knowing what they want it to do for their outfits.

"This leads to developers being expected to 'have AI experience,' without anyone understanding what that means," she says.

"There's a big difference between developing LLMs and software to utilise them, developing ML algorithms, and just being capable of using a chatbot."

'Fears over many organisations insisting on on-payroll contractors'

Nicole Slowey, a director of Qdos, acknowledges that "AI and technology replacing them" is on the radar of some IT contractors for 2026.

But she says the prospect of "many businesses" in 2026 simply "insisting" that all contractors they hire join a payroll is the subject of out-and-out "fears".

"More businesses are taking a pragmatic approach to the off-payroll working rules," Ms Slowey reassured last week, in a social media post.

"But there's still plenty of room for others to reconsider how they engage contractors."

'If you genuinely work for yourself, you can't be forced into anything'

According to the Qdos study, the majority (54%) of freelancers polled said they want a reversal of IR35 reform in 2026.

Yet Richardson, who won her own IR35 case against HMRC in 2011, says any contractor 'forced onto payroll' probably "wasn't a bonafide contractor in the first place."

"Harsh?" she says. "Possibly. But if you genuinely work for yourself, you can't be forced into anything."

'We all need to work under regulations'

Ken Davis, who operates through his own limited company, hinted that it's side-stepping end-users who ought to be forced to follow the OPW rules.

"IR35 itself isn't the problem," the Linux contractor began to ContractorUK.

"We all need to work under regulations. It's the companies that simply bypass the regulations with the blanket bans that are the problem."

'It's telling that IR35 still tops the list of contractor income threats'

Speaking last night to ContractorUK about the Qdos findings, Fred Hicks, senior policy adviser at IPSE, reflected: "Even with the tax burden on contractors at historic highs, it's telling that IR35 tops the list of threats to contractors' income.

"It suggests that contractors care more about protecting their independent status than they do about their exact tax bill. This was the message at the heart of the campaign against the IR35 reforms. And it's interesting to see that it still rings true today."

'Risks of being in business'

The Association of Independent Professionals and the Self-Employed (IPSE) added: "Contractors have always managed the natural risks of being in business.

"But IR35 is an imposed barrier that distorts the hiring process for freelancers and clients alike. If policymakers are genuinely interested in fostering economic growth, dismantling this barrier is a must."