IR35 In Focus: What STEM Contractors Are Telling Us
The 2021 changes to IR35 were meant to make things clearer and fairer. But for many contractors the cumulative impact of many changes has been mixed.
Since the reforms, some report a reduction in the quality of opportunities, as well as changes to rates, and perceived job security...
In short, the contracting landscape is evolving — and with it, professionals are reassessing how and where they want to work.
What the Government says
HMRC’s* own data shows the reforms changed behaviour:
- 280,000 workers left PSC (limited company) arrangements
- 120,000 of these exits were directly due to IR35
- 45,000 fewer PSCs were created than expected
- £4.2 billion in additional tax revenue was raised
*(SOURCE: HMRC, Corporate report update 2025)
Many contractors are rethinking the trade-offs of independent work. Rising costs and legislative changes including IR35 reforms mean they’re often paying more without seeing a meaningful boost in take-home pay.
In fact, the average affected worker saw their tax bill rise by around £10,000 a year. While some may have experienced a pre-tax uplift, many feel they’ve lost some of the freedom and financial flexibility that once made contracting so appealing.
For employers, this presents a chance to stand out. By offering clarity, consistency, and support; from streamlined onboarding to fair rates and prompt payment you can help restore some of that lost freedom and build stronger, longer-lasting contractor relationships.
IR35 status in job ads? Think twice...
How you position IR35 in your job ad matters - a lot!
A fixed IR35 status in a job listing can drastically narrow your candidate pool.
- 26% of STEM professionals say they won’t apply for roles advertised as Inside IR35
- 22% will not apply if the role specifies Umbrella employment
- 27% search for Outside IR35 roles
- And 11% believe it is inappropriate for job ads to specify IR35 status.
But this doesn’t mean avoiding IR35 altogether, it means getting your strategy right. For genuinely self-employed contractors, being offered Inside IR35 roles may feel like a mismatch from the start.
Employers who take the time to properly assess working practices, and who define roles based on real project need, not blanket policy are more likely to attract top talent.
A clear off-payroll engagement strategy, aligned with your wider workforce planning, can make all the difference.
How you position IR35 in your job ad matters - a lot!
A fixed IR35 status in a job listing can drastically narrow your candidate pool.
- 26% of STEM professionals say they won’t apply for roles advertised as Inside IR35
- 22% who will not apply if the role specifies Umbrella employment
- 27% search for Outside IR35 roles
- And 11% believe it is inappropriate for job ads to specify IR35 status.
But this doesn’t mean avoiding IR35 altogether, it means getting your strategy right. For genuinely self-employed contractors, being offered Inside IR35 roles may feel like a mismatch from the start.
Employers who take the time to properly assess working practices, and who define roles based on real project need, not blanket policy are more likely to attract top talent.
A clear off-payroll engagement strategy, aligned with your wider workforce planning, can make all the difference.
Budget 2025: What impact will it have on contractor confidence?
The 2025 Budget brought in changes that may reshape contractor demand, but it also gives employers a fresh opportunity to rethink how they resource projects effectively.
Here's what contractors are saying...
Why is this happening?
Employer National Insurance changes kicked in from April 2025. According to Matchtech analysis of ONS data:
- Two-thirds of UK businesses with 10+ staff expect staffing costs to rise
- Only a third (32%) said they’d absorb it
- Nearly half (49%) plan to raise prices
- Others plan to cut investment (18%), headcount (26%), wage growth (21%) or overtime (15%)
While many will look to reduce costs in their permanent teams, contractors may become an even more strategic part of the workforce mix offering flexibility without long-term overheads. The key is attracting the right talent at the right time and building the kind of contractor experience that keeps them coming back.
Why is this happening?
Employer National Insurance changes kicked in from April 2025. According to Matchtech analysis of ONS data:
- Two-thirds of UK businesses with 10+ staff expect staffing costs to rise
- Only a third (32%) said they’d absorb it
- Nearly half (49%) plan to raise prices
- Others plan to cut investment (18%), headcount (26%), wage growth (21%) or overtime (15%)
While many will look to reduce costs in their permanent teams, contractors may become an even more strategic part of the workforce mix offering flexibility without long-term overheads. The key is attracting the right talent at the right time and building the kind of contractor experience that keeps them coming back.
It’s not just IR35 shaping contractor sentiment...
Broader tax and compliance changes like Making Tax Digital (MTD) and updates to Capital Gains Tax are also having an impact.
What’s behind the shift?
Making Tax Digital is rolling out from April 2026. It’ll require digital record-keeping and submission for self-employed individuals creating new admin challenges for time-poor contractors.
Capital Gains Tax changes could also affect contractors with limited companies, especially those planning to sell or wind up their business down the line.
These changes may prompt some to reconsider contracting altogether or become more selective about the roles they take on. For employers, it’s a chance to step up by offering clarity, consistent engagement, and support that makes working with you simpler and more appealing in a changing landscape.
Smart employers should:
Stay close to their contractor networks
Offer clarity and support around onboarding, finance and compliance
Keep communication open about long-term project pipelines
Stay close to their contractor networks
Offer clarity and support around onboarding, finance and compliance
Keep communication open about long-term project pipelines
Because when things get uncertain, the best talent looks for certainty elsewhere.
While tax and compliance changes have tested contractor confidence, they’re only part of the story. Looking ahead, new technologies like AI and a shifting career landscape are reshaping how STEM professionals think about the future and with the right support, these changes could unlock fresh opportunities for growth, innovation, and talent attraction