Thu, 12 Dec 2013A survey of 1,500 contractors and freelancers reveals that PAYE umbrella companies are becoming the most popular way of getting paid.

60.1% of the contractors surveyed this year chose getting paid through umbrella companies for their last assignment, according to ‘The State of the Contractor Nation 2013’, which is available online. This figure marks a big increase from 2012 where 37% of contractors were using both agency PAYE and PAYE umbrella arrangements combined.

Conducted by payroll services company FPS and job board Contractjobs.com, the survey found that self-managed limited companies were used by 16.9% of contractors. However, only 3% of respondents had chosen to set up one of these companies in the last year, the survey report said.

Of the respondents, the top five contractor industries represented were healthcare, social care, IT, finance and engineering.

Other findings included:

• 79.2% of survey respondents said they have little understanding about the introduction of pension auto-enrolment and other recent changes to pensions. Only 11.7% reported having a good grasp on the legislation’s implications

• 74.9% worried about regulatory compliance. However, only 15.8% said they were very worried about paying the right amount of tax with only 33% concerned about fines for non-compliance with legislation

• Two out of five contractors were unaware that they, and not their company, may be liable for any unpaid taxes should HMRC decide they have been using a tax structure that is not compliant with regulations.