More outside-IR35 roles this year, but Reed says it is projects, not policy

Contractors who have noticed more outside-IR35 engagements being advertised in 2026 are not imagining it. What they should not read into it, according to the technology contract practice at Reed, is any shift in how businesses think about the rules.

Kelly Macey, who heads contract practice for Reed's technology division, set out the recruiter's reading of the market in an analysis published on 5 August. Reed has seen an increase in outside-IR35 roles this year. Its explanation is that four things have happened at once, none of which amounts to a change of policy by engagers.

Four causes

The first is understanding. After the private sector reform of April 2021 many businesses stopped using outside-IR35 contractors altogether, and Reed's roundtables with clients suggest that was driven by lack of knowledge rather than deliberate strategy. Five years on, the businesses that engage contractors regularly have learned how to make a determination and are more willing to make one that says outside when the facts support it.

The second is the economy. Improvement over the last six to twelve months has released transformation projects that were held back: data and artificial intelligence programmes, cyber security work and enterprise-wide change. Those projects need specialist skills that businesses do not have and do not want permanently, which is the classic outside-IR35 engagement.

The third follows from the second. A specialist brought in to deliver a defined project, deciding how the work is done and operating as a business, is outside the rules on the ordinary tests. The nature of the work has created the determination, not a change in appetite for risk.

The fourth is cost. The joint and several liability rules for umbrella companies that took effect in April, and the rising complexity and expense of umbrella engagement generally, have made some businesses look again at whether an inside determination and an umbrella are the path of least resistance they once seemed.

What has not changed

Macey's caution is that the legislation is exactly what it was. The determining factors remain the level of direction and control, whether the contractor decides how the work is delivered, and whether they operate a genuine independent business. Business-as-usual support, operational roles and contractors who are in practice filling permanent vacancies will continue to sit inside, whatever the current mood.

That reading fits the other evidence of the summer. The Treasury told public sector accounting officers in June that off-payroll enforcement remains a compliance priority, and ruled out a review of the rules on 30 June. The government departments that administer the regime have accumulated around £400 million in IR35 liabilities since 2017. Businesses that make outside determinations are doing so in the knowledge that HMRC has not gone away.

For contractors the practical message is that the outside-IR35 opportunities of 2026 are attached to specific projects and will end with them. A contractor positioned as a specialist with a defined deliverable will find them. One positioned as an extra pair of hands will not, and the rules have not changed to make that easier.