IR35 triggers surge in contractor use of umbrella companies – industry benefits defended

However, despite all this animosity, the umbrella industry appears to be thriving in the face of changing tax legislation.

According to the PAYE umbrella enterprise Cool Company, a 338 percent uplift in contractors working under umbrella companies was seen in March 2021 compared to the same period last year.

The company detailed: “In the last three months, despite the Covid-19 pandemic, contractor sign ups have skyrocketed.

“In January 2021, the company reported a 50 percent year on year uplift in signups.

“In February, that figure climbed sharply to 217 percent. Peaking at 388 percent in March. This increase has been seen across sectors,with particularly strong results in the recovering creative and IT sectors, making up 32 percent and 8 percent of users, respectively during 2021.”

Kris Simpson, Cool Company’s Head of Business, reflected on these figures and what they mean for the industry.

She said: “Almost all businesses took a hit during the pandemic, and contractors were some of the first impacted. However, things have changed rapidly since then. Covid-19 has ushered in a new way of working, more businesses are seeing the potential of contractors.

“This, coupled with the implementation of the new IR35 legislation, has meant that more contractors are shifting to umbrella solutions and recruiters are looking for a simple solution to IR35 compliance when placing contractors.

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