Home Business News IR35 triggers 388% surge in contractors working under umbrella companies

IR35 triggers 388% surge in contractors working under umbrella companies

by LLB Finance Reporter
29th Apr 21 8:42 am

The announcement of an enhanced IR35 tax legislation in April 2020 immediately sent contract workers across the UK into a spin. It had the potential to completely change the way that many worked, even threatening livelihoods as businesses grappled with the potential ramifications. One year on, as the legislation comes into force, contractors are finding new, more secure ways of working.

With PAYE umbrella enterprise, Cool Company, reporting a 388% uplift in contractor sign up in March 2021 compared to 12 months earlier.

The role of umbrella companies is to provide contractors with the rights and benefits of employees, while leaving them free to control when and who they wish to work for. Operating in Sweden, Norway, and the UK, the growth in contractor uptake for Cool Company has been solid since its foundation.

However, in the last three months, despite the Covid-19 pandemic, contractor sign ups have skyrocketed. In January 2021, the company reported a 50% year on year uplift in signups. In February, that figure climbed sharply to 217%. Peaking at 388% in March. This increase has been seen across sectors, with particularly strong results in the recovering creative and  IT sectors, making up 28% and 14% of users, respectively.

Cool Company’s Head of Business, Kris Simpson, comments: ‘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. While this will initially be due to caution – not wishing to fall foul of the new regulations – umbrella companies also provide the security that many freelance and contract workers miss. Allowing the freedom of choice that comes with self-employment, while removing the red tape headache.’ 

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