Comment by varispeed | Hacker News Reader

Comment by varispeed | Hacker News Reader

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It's a common misconception that IR35 only affects a narrow group of high-earning professionals - TV presenters, consultants, and the like. But that framing misses the wider picture and, frankly, suits the narrative that was used to sell the legislation to the public.

In reality, IR35 has had a broad and damaging impact on a much wider group of skilled workers - IT contractors, engineers, healthcare professionals, tradespeople - many of whom built small, legitimate limited companies as a way to work flexibly, compete fairly, and build some financial security. It was one of the few viable paths to independence left, and IR35 has made it effectively unworkable for many.

Large corporations didn't like losing contracts and talent to smaller, more agile competitors. IR35 conveniently removed that competition by making small operators too much of a compliance risk to hire. Meanwhile, public sector bodies were discouraged—sometimes even penalised—for engaging small suppliers, further consolidating the power of the big consultancies.

The media focus on celebrity cases wasn't accidental. HMRC gained free publicity and public support by targeting high-profile individuals - knowing it would reinforce the idea that IR35 was closing tax loopholes rather than quietly dismantling a thriving small business ecosystem. The result is a workforce with less autonomy, less incentive to go above and beyond, and fewer opportunities to build something for themselves.

This isn't just about tax - it's about economic structure, incentives, and who gets to participate in the rewards of their own labour. And when those opportunities disappear, so does productivity, innovation, and local economic resilience.

> IT contractors, engineers, healthcare professionals

You're not disagreeing with me, other than that I don't consider those "working class" occupations. In general in the UK those are quite often middle to upper middle class.

> tradespeople

Still do run small limited companies AFAICT. Certainly the ones I used to interact with. Mostly because they have multiple clients and are a lot harder to point at and say "that's not a real business!"

Unlike the US, UK is closer to EU in that IT contractors, engineers, tech work is paid and perceived closer to skilled labour than professional-managerial class.

Upper-middle class is mostly bankers, barristers, surgeons, some politicans and so forth.

I am British and have been a consultant.

While permanent IT staff are often regarded as generic office workers, usually in poorly performing small to medium enterprises in backwaters around the country, in London and in Finance this is not really the case.

Consultant IT people can make out like bandits, IR35 or no, and even those perm people in the backwaters are middle class in earning and habits. It’s absolutely not a working class occupation.

Incidentally this attitude from middle management in (mostly) non-London SMEs is a big part of why they are doomed to fail - they value middle-management above skilled workers and end up in a doom spiral of low pay, low productivity and low expectations. If you’re in one of those situations - get out, opportunity is out there. But you won’t find it in a shabby office at the back-end of an industrial estate in Basingstoke.

There's a common mistake in equating class with job title or postcode. Being a consultant doesn't automatically make someone middle class—especially when they don't own the means of production, don't control their work, and can't build anything lasting from it. That's the real distinction. Class is about power and autonomy, not just how polished your CV looks or how many screens are on your desk.

Many skilled workers set up limited companies not to "make out like bandits" but to gain a small degree of control in a system that otherwise offers very little. IR35 took that away, not from boardrooms or multinational firms, but from individuals trying to carve out their own space. It wasn't just a policy shift—it was a signal: you're not allowed to operate outside the machine.

This has little to do with London versus the rest. It's about how the economy is increasingly structured to funnel all meaningful work through large gatekeepers, whether private or public. The destruction of small-scale service businesses - especially in the public sector - didn't just hurt livelihoods. It erased entire layers of local innovation, independence, and pride in craft.

The result is exactly what we see now: a drained workforce with no stake in the outcome, no reason to go above and beyond, and no path to build something of their own. That's not a London problem or a Basingstoke problem. That's a systemic one.

IR35 didn’t take it away at all, it still thrives unless you’re skirting too close to employment. Contract software is still a huge thing in the UK.

It certainly needs reform, but it hasn’t killed the contracting sector. Far from it. It’s still massively lucrative.

Yes, the public sector restrictions a few years ago changed some things, but from friends in the public sector AFAICT what it changed was that it cut down on a culture of people who were for all intents and purposes employees, who had often been in positions of managerial responsibility in councils and other bodies for years, pretending they were independent businesses and avoiding tax while (comparatively) charging the earth.

However you want to paint it class -wise, when someone is acting as an officer in a company or council for half a decade, they’re not an independent creative struggling to have some control, they’re working a job like any other schmuck.

Honestly, I think the UK tax laws need to be reformed so that it doesn’t matter for income - you make money in a company structure as a contractor, or make it as an employee, tax is the same. Dividend or income, tax is the same. It would sort the unholy mess out and take away the incentives to use contracting as a tax dodge and for HMRC to retroactively fuck up someone’s life.

It’s how it works here in Australia. No IR35 required, for the most part income is income is income and it all counts towards your taxable total. Then you work how it best suits you.

The idea that IR35 only affected people "skirting too close to employment" is the exact narrative big consultancies wanted the public to believe. It reframes trust-based, long-term client relationships - the lifeblood of any good business - as suspicious when delivered by individuals, but completely acceptable when delivered by large firms.

Here's the reality: a one-person limited company providing services to a council for several years is treated as "dodgy" or "cheating the tax system." But if a big consultancy sends in a contractor to sit at the same desk for the same duration, it's completely exempt from IR35 scrutiny. The only difference? Ownership. The first is worker-owned, the second is not.

IR35 doesn't prevent "disguised employment." It just channels it through structures that protect and enrich corporate intermediaries. And those same intermediaries are often billing 2–3x the rate a direct contractor would charge—while extracting value from someone else's labour, then exporting the profits.

You also dismiss repeat clients as a sign of disguised employment - but by that logic, any successful small business with loyal customers should be disqualified from existing. Long-term client relationships are the goal of any serious enterprise. It's only when those relationships threaten the margins of large incumbents that they suddenly become suspect.

IR35 wasn't about fairness or tax efficiency. It was about reclaiming market share - removing small, independent operators who were too competitive, too flexible, and too accountable to clients, and replacing them with firms who could play the compliance game and charge more for less.

So no—IR35 didn’t just "clean up abuse." It entrenched it. It created a two-tier system where actual independence is punished, and corporate dependency is rewarded. That's not reform - that's capture.

> I don't consider those "working class" occupations. In general in the UK those are quite often middle to upper middle class.

IT has been one of the only modern trades where working-class people could genuinely break through - without inherited privilege, connections, or expensive qualifications. All it took was a computer, determination, and skill. For decades, it offered an alternative route to upward mobility that wasn't gatekept by traditional class boundaries.

To say those people aren't "working class" anymore simply because they found success in a high-paid field is to misunderstand how class mobility works - and to dismiss the significance of what's been lost. IR35 didn't just hit a few middle-class professionals - it cut off a rare path to independence that was uniquely accessible to people from working-class backgrounds.

That's what makes it so damaging. It's not just about tax or regulation - it's about who's allowed to build something for themselves, and who gets pushed back into being a compliant employee for a large organisation.

> Still do run small limited companies AFAICT

You're absolutely right—tradespeople doing B2C work are largely unaffected, because IR35 targets B2B relationships, especially when the client is a medium or large company. But that actually reinforces the concern: it's access to the broader market - especially corporate and public sector clients - that’s been cut off.

For working-class professionals who moved into areas like IT, healthcare, or consulting, IR35 has closed the door to operating as a small business in those spaces. They can still work - but now only as employees or through intermediaries, with fewer rights and no control. They’re denied the same freedom tradespeople still have in B2C, despite offering equally legitimate, client-driven services.

So yes, plumbers and electricians can run limited companies - but if someone from a similar background wanted to build a small IT consultancy or contract directly with the NHS, that’s now a legal minefield. The playing field isn’t level - it’s skewed in favour of large firms, and that restriction disproportionately hurts those without generational wealth or corporate safety nets.

There is no such thing as a working class professional!

It’s clear we’re talking past each other. I disagree that IR35 has had a specific effect on social mobility, but am happy to leave the conversation here!

Fair enough. Though saying there's no such thing as a working-class professional is a deeply classist take - and kind of proves my point. All the best!

How is that classist?

If someone is a professional, they are engaged in a middle class job on a middle class income. Unless you consider “working class” to be something that is indelibly stamped on someone’s soul at birth…

Being a professional or in management is pretty much the definition of middle class - https://en.m.wikipedia.org/wiki/Social_class_in_the_United_K...

This is what I mean by talking past each other - I don’t think we’re working from the same dictionary.

The issue is that you're treating class as a static category based purely on occupation or income - effectively saying that once someone earns a decent wage or becomes "a professional", they're no longer working class. That's a very narrow, top-down view, and ironically, it erases one of the few success stories of social mobility.

Many working-class people entered fields like IT, engineering, or contracting not because they were "born middle class", but because those were accessible paths that didn't require elite credentials, family connections, or private education. They built businesses, gained skills, and carved out independence - often still without the security, assets, or cultural capital traditionally associated with the middle class.

By your definition, the moment they succeed, they're no longer working class - which conveniently absolves the system of any responsibility for making life harder for them. It's circular: "If you’re struggling, you're working class. If you succeed, you were never working class." That's what's classist—defining people's identity by a fixed socioeconomic role and then erasing their background the moment they transcend it.

Social class isn't just about job title - it's about access to capital, power, mobility, and resilience in the face of economic shocks. IR35 disproportionately affected people who were just starting to get a foothold in those areas - often without the safety net others take for granted.

And yes, we may be using different definitions - but mine accounts for lived experience and systemic barriers, not just an abstract Wikipedia definition from a table written decades ago.

> "If you’re struggling, you're working class. If you succeed, you were never working class."

That's not what I've been saying at all, and IMHO that's pretty disingenuous. It doesn't absolve anyone of anything, it's a definition.

You do you though I guess.

It's a critique of the logic embedded in the definition you're using. You said earlier that being a professional or in management is "pretty much the definition of middle class." That is treating class as a static category tied to job role and income, not history, autonomy, or access to power.

My point is: when you define class that narrowly, it becomes easy to dismiss systemic barriers people face once they gain a bit of success. It makes it seem like they've escaped and no longer face structural disadvantages, which just isn't true for many. Especially when policies like IR35 are designed to push them out of ownership and back into dependency.

Are there any metrics that could be used to test this theory?

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