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How many umbrella company workers are there in the UK?

The number of umbrella company workers in the UK has increased substantially over the past 15 years.

According to the industry sources we have examined, the pool of umbrella workers increased from around 100,000 in 2008 to up to 700,000 today (2023/4).

This number includes workers across a wide variety of industries, including IT contractors.

There are also around 500 umbrella company providers, according to industry sources.

Using a wide range of sources, we look at how umbrella employment has changed over time.

How many umbrella employees are there?

There are several reasons why it is hard to estimate the total number of umbrella workers at any one time.

The umbrella market is unregulated, and umbrella companies are themselves just standard limited companies that operate payroll services.

There is no distinct HMRC or Companies House classification for an umbrella provider. This makes identifying the number of umbrella workers challenging.

In its Labour Market Intermediaries Report from 2021, the LITRG makes some useful observations [pdf].

  • There is no distinct HMRC business category for an ‘umbrella company’.
  • The terms ‘self employed’, ‘contractor’ and ‘freelancer’ are used in different ways, which is confusing.
  • There is an overlap between the terms ‘agency worker’ and ‘contractor’ which may influence estimates.

Despite these and other impediments, the estimates provided by some well-known sources reveal a great deal of consensus.

Over time, the number of umbrella workers has risen rapidly.

A proportion of the rise over the past few years can be attributed to the April 2021 introduction of the Off Payroll working rules for private sector assignments.

Following the introduction of the new rules, many clients – unwilling to take on the risk of determining the employment status of limited company workers – opted to only take on umbrella candidates.

FCSA estimate – 700,000 (2021)

The Freelance and Contractor Services Association, which represents many accountants and umbrella providers makes this estimate in its 2022 response to the government’s call for evidence on the umbrella company market.

The FCSA says that by 2021:

… the number had grown to nearly 700,000 umbrella employees operating through around 500 umbrella companies. The FCSA estimates that these employees contribute over £19 billion to HM Treasury.

PayePass estimate – 700,000 (2021/22)

According to PayePass, the number of umbrella company workers increased from around 600,000 in 2018/19 to around 700,000 in 2021/22.

In its ‘Shifting Sands’ report, which you can download here [pdf], the payroll auditing firm suggests that the rise in umbrella company workers “has now peaked”.

The report includes a comprehensive drill-down into the composition of the UK’s contingent workforce.

FCSA estimate – 625,000 (2020)

In a joint statement, the FCSA and NASUWT wrote to the government seeking clarification on a COVID-related issue. The number of UK contractors was put at 625,000 at the time.

LITRG estimate – 600,000 (2021)

In its report which we referred to earlier, the LITRG states [pdf]:

Although it is not particularly scientific, we therefore estimate that in the near future (if not already) there could be over 600,000 people working through umbrella companies.

Government estimate – 500,000 (2020-21)

The government provided some further estimates in its call for evidence into the umbrella market – published in November 2021.

HMRC analysis suggests that at least 500,000 individuals were employed by an umbrella company in the 2020-21 tax year.

You can download the document here [pdf].

FCSA estimate – 400,000 (2015)

The FCSA references this figure in its 2022 response to HMRC’s call for evidence on the umbrella company.

The organisation also states that there were approximately 250 umbrella providers at the time.

HMRC observation on the number of umbrella companies (2013-14)

Another interesting reference in its call for evidence into the umbrella market – published in November 2021.

HMRC estimates that the largest 50 umbrella companies alone employed 150,000 umbrella workers during the 2013/14 tax year.

Government estimate – 100,000 (2008)

The umbrella company model exploded following the implementation of the Managed Service Company legislation.

The reference to the 2008 estimate is also contained in the government’s November 2021 call for evidence document.

 

If you have any useful data to share with the Contract Eye team, please send us an email.

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Last updated: 21st January 2024