A survey of over 700 contractors and freelancers conducted by ContractorCalculator has found significant concerns about the impact of IR35 reforms, the role of umbrella companies, and ongoing transparency issues across the UK’s flexible workforce sector.
The results land at a pivotal moment for the sector, as on May 1st the government closes its consultation Make Work Pay: Modernising the Agency Work Regulatory Framework, which seeks to modernise the Conduct Regulations and bring umbrella companies into clearer regulatory scope, improving worker security, pay transparency and genuine choice.
The survey found:
Contractors pushed into umbrellas
- 85 per cent are told they must use an umbrella for certain roles
- 71 per cent report roles conditional on umbrella use
- 88 per cent say an umbrella was the only option in their most recent engagement
(These are for contractors who are working via agencies on “on-payroll” engagements. E.g. not working Outside IR35.)
Strong contractor opposition
- Only 5 per cent are happy to use an umbrella
- 25 per cent say they will never use one
- 39 per cent will only use one if forced
This lack of choice is impacting the market, with contractors declining roles, increasing rates, or leaving altogether, thereby reducing access to talent for hiring firms.
The survey also highlights the increasing exposure faced by agencies and end clients under the new Joint and Several Liability (JSL) rules, which came into effect on 06 April 2026. Under these rules, organisations can be held responsible for unpaid tax where non-compliant umbrella companies are used. However, the data shows this risk is difficult to manage in practice:
- 69 per cent of contractors cannot determine whether an umbrella company is tax compliant
- Payslip complexity and unclear deductions remain widespread
- 34 per cent choose umbrellas based on the highest take-home pay rather than compliance
With Joint and Several Liability (JSL) rules now in effect, these conditions increase the risk of non-compliance transferring up the supply chain.
IR35 continues to drive market distortion
- 82 per cent of contractors have secured outside IR35 work
- 78 per cent of Status Determination Statements result in outside IR35 outcomes
- 81 per cent increase rates when working inside IR35
Despite this:
- 85 per cent are told roles are inside IR35 and require umbrella use
- 71 per cent report roles conditional on umbrella use
- 88 per cent say umbrella is the only option
This highlights a disconnect between actual working practices and how engagements are structured, with risk-averse approaches driving widespread umbrella use.
Non-compliance concerns remain embedded
- 50 per cent have discovered unexpected deductions
- 39 per cent report being paid late
- Only 30 per cent can confirm payslip accuracy
- Just 37 per cent received a Key Information Document
While some areas show improvement, persistent issues indicate ongoing systemic risks.
Transparency gaps remain a core problem
- Only 54 per cent understand the difference between assignment and PAYE rates
- Just 35 per cent can calculate gross pay from an assignment rate
- Only 30 per cent can verify payslip accuracy
These gaps leave contractors vulnerable to errors and potential exploitation.
“Our survey results strongly reinforce the direction of travel set out in the government’s Make Work Pay consultation,” said Dave Chaplin, CEO of ContractorCalculator. “They highlight, in real terms, the lack of choice, transparency, and understanding that contractors are currently facing across the agency and umbrella landscape.
“Crucially, our survey shows just how widespread the issue of restricted choice has become, with many contractors being offered roles conditional on using a specific umbrella company,” he continued. “The proposal to remove this practice is essential. Giving contractors genuine freedom to choose how they work will help prevent the kind of market distortions that have previously led to workers being channelled into high-risk or non-compliant arrangements.
“The findings also underline the need for greater transparency around pay. Many respondents reported confusion over rates, deductions, and payslips, which aligns directly with the consultation’s focus on improving clarity. Moving away from opaque structures like the ‘assignment rate’ will be a significant step forward in helping contractors understand exactly what they are earning and why.”
Chaplin believes recruiters will need to adapt their models to ensure they can offer real alternatives, including agency payroll, rather than relying solely on umbrella companies, reflecting the reality that not all contractors want to work through umbrellas.
“Overall, the survey provides strong supporting evidence for the government’s mission, so I would urge them to heed the results and act,’ says Chaplin. “If implemented effectively, the government’s proposals have the potential to create a more transparent, fair, and balanced market for contractors in a move which is both sensible and long overdue.”
