IR35 and Autumn Budget 2026: What Contractors Should Watch For

The debate around IR35 has returned to the spotlight as the UK approaches the Autumn Budget on 28 October 2026. Contractor advisers have renewed calls for changes to the off-payroll working regime, including greater certainty for businesses and action against the tendency of some organisations to default contractors to inside IR35.

However, contractors should distinguish between calls for reform and changes that have actually been announced. As things stand, there is no confirmed IR35 overhaul to wait for. Recent reporting notes that the government had previously ruled out a review of the off-payroll legislation, while HM Treasury reiterated in June that off-payroll working enforcement remains a compliance priority.

That makes the months ahead an important time for contractors to concentrate on what they can control: their contracts, working practices, evidence and protection.

 

Why Is IR35 Back in the Headlines?

On 24 August, ContractorUK reported that several contractor sector advisers are asking the Chancellor to use the forthcoming Budget to deliver what has been described as an ‘IR35 reset’.

A particular concern is risk aversion among hiring organisations. Some advisers argue that businesses remain reluctant to engage contractors outside IR35 because of fears surrounding HMRC scrutiny and potential tax liabilities.

For genuine contractors, this matters. A business that automatically classifies engagements as inside IR35 may make it harder for independent professionals to secure engagements that could legitimately operate outside the rules.

But calls for reform should not be confused with government policy.

Contractors should continue operating on the basis of the legislation currently in force rather than anticipating that October’s Budget will remove or substantially reform IR35.

 

Don’t Put IR35 Compliance on Hold

One of the risks created by speculation about future reform is that contractors or businesses postpone reviewing existing arrangements.

That would be a mistake.

HMRC enforcement of off-payroll working remains active. Businesses subjected to enquiries can be asked for significant amounts of information concerning their processes and individual status determinations, while professional advisers report increased scrutiny of contractor populations and supply chains.

For contractors, good IR35 management therefore remains important regardless of what might eventually be announced in the Budget.

An outside IR35 position should be capable of being supported by both the written agreement and the reality of the engagement.

 

Contracts and Working Practices Need to Match

An IR35 Contract Review should never be treated purely as a contract reading exercise.

The written agreement is important, but the actual relationship between contractor and client matters too.

Issues such as control, personal service and substitution, mutuality of obligation, financial risk and integration into the client’s organisation can all contribute to the overall employment status picture.

A contract might, for example, give a contractor considerable independence over how services are delivered. If the client actually exercises substantial day-to-day control, however, there may be a disconnect between the contractual position and reality.

That is why an IR35 Status Review can be particularly useful before commencing an engagement or when a contract is renewed. Providers such as The Contractor Compliance Portal offer this service for free, and allow users to download their results as evidence.

Contractors should also reconsider their position where working practices materially change during an assignment.

 

Keep Evidence, Not Just an IR35 Result

Good documentation can be extremely valuable if HMRC subsequently questions an engagement.

Contractors should consider retaining their contract, IR35 assessment or review, relevant correspondence and evidence demonstrating how the engagement actually operated.

That might include evidence showing project based deliverables, autonomy over delivery, genuine business risk or other relevant features of the relationship.

The objective isn’t to manufacture an outside IR35 position. It is to retain contemporaneous evidence of a genuinely independent engagement.

 

What About the Company Size Threshold Changes?

Another area where contractors need accurate information is the increase in UK company-size thresholds.

From 6 April 2025, the small company thresholds increased to £15 million turnover and £7.5 million balance-sheet total, while the 50-employee threshold remained unchanged. However, HMRC confirms that these changes do not have a practical effect on the off-payroll rules until 6 April 2027 at the earliest because of the way company size is determined using previous financial years.

This is an important distinction for contractors who may have seen commentary suggesting responsibility had already shifted in 2026.

Where a client is currently responsible for an IR35 determination, contractors shouldn’t simply assume the increased thresholds have transferred that responsibility back to their limited company.

 

Where Does IR35 Insurance Fit?

Even a carefully considered outside IR35 engagement can potentially be challenged.

IR35 Insurance can provide another layer of protection by helping with the financial and professional consequences of a covered HMRC investigation, subject to the particular policy terms and conditions.

Insurance should complement good compliance rather than substitute for it.

A stronger approach is to ensure the engagement has been properly considered, obtain an appropriate IR35 Contract Review and IR35 Status Review, retain evidence supporting the position and then consider insurance against the residual investigation risk.

Contractors should also consider their wider business exposures. Depending upon their circumstances, Professional Indemnity Insurance, Public Liability Insurance and Employers’ Liability Insurance can protect against risks quite separate from IR35.

 

What Should Contractors Do Before the Autumn Budget?

There is little value in trying to predict precisely what the Chancellor will announce on 28 October.

Instead, contractors can use the coming weeks to review current engagements, check that contracts reflect genuine working practices, retain supporting evidence and address questionable terms before they become problems.

The contractor sector may be calling for an IR35 reset, but until the government actually announces a change, the existing rules remain the rules contractors need to manage.

For genuinely independent contractors, good documentation and robust working practices remain among the strongest foundations for defending an outside IR35 position.