Taxman calls time on umbrella companies

Grant Prior 7 years ago
Share

A leading payroll company has conceded that Budget changes “effectively signal the end for umbrella schemes as they stand”.

Chancellor George Osborne announced the latest planned crackdown on travel and subsistence tax reliefs used by umbrella schemes.

But companies operating in the sector have already been contacted by HMRC outlining stricter revisions to current rules.

Howard Hughes, CEO of payroll specialist, Ship Shape Pay said: “The budget wording itself promised to ‘restrict’ travel and subsistence relief.

“Yet intermediaries, including Ship Shape, that were involved in the consultation, today received communications from HMRC that confirmed relief would be ‘removed’ for anyone under supervision, direction or control – so basically every worker that umbrella was designed to service.

“The bottom line is that in April next year all current umbrella workers will require a new payment solution, or they will seek a new employer.

“If HMRC has its way, direct employment in industries where umbrella is common will experience an increase in the cost of labour approaching 20% through increased National Insurance and paid absence.

“That will need to be absorbed in higher charges to end hirers, reduced agency margins and lower pay rates to workers currently paid through umbrella.”

Hughes added that “agencies and their clients should instead properly analyse their contract workforce in order to identify if umbrella workers should transition to PAYE (direct, through the agency or a payroll bureau), or allow limited company status or self-employment where supervision, direction and control in the workplace can be proved absent.

“This analysis should be supplied to recruitment agencies right now by their existing payroll companies.”

“Great progress has been made by agencies that outsource worker registrations, timesheets, pay, bill and compliance management onto the more advanced umbrella companies.

“Taking this administration burden and cost back in-house would be a backward step.

“Agencies confused about the worker contract options available to minimise cost of labour and concerned about meeting pay, compliance or other administration requirements should seek out a dependable payroll services partner with a clean bill of health to find peace of mind.”

Latest news

Greswolde Construction goes under

Solihull contractors ceases trading with 24 jobs lost
17 hours ago

Designs revealed for £1bn London Blackfriars tower blocks

Fosters design landmark green office skyscraper and two blocks of flats for Southwark site
1 day ago

Everton stadium job still on budget despite inflation

Club and Laing O'Rourke confident they can still build new ground for £500m
1 day ago

Construction output falls 1.4% halting 7-month growth spurt

Fresh output and orders figures confirm summer construction slowdown
1 day ago

McLaren gets green light for £85m build-to-rent scheme

Construction set to start this autumn on major city centre development
1 day ago

BAM limbers up for £25m Bedworth leisure centre

Pioneering Warwickshire health and fitness hub to start this autumn
1 day ago

Keepmoat to start four-year build in Wigan

Major regeneration scheme to start across four sites
1 day ago

Solihull contractor Greswolde heading for administration

New investors took over business 12 months ago
2 days ago

Duo win £500m canal and river main works deal

Kier and Bentley bag Canal & Rivers Trust's largest ever water engineering works deal
3 days ago

Construction Manager of the Year finalists revealed

70 of the industry's brightest talents: Full list
2 days ago

Willmott Dixon fills new strategic change director role

Vistry Group change director joins private builder to support future growth
2 days ago

Work starts on £42m Oldham Spindles overhaul

Willmott Dixon signs off £42m deal to create new market, offices and event space
2 days ago

Firms wanted for Telford & Wrekin £1.6bn building works DPS

Call up for dynamic purchasing system covering building and refurbishment work
2 days ago

Kier pulls off contracts league double in July

Contractor bags highest value of new work and tops rolling 12 months ranking
3 days ago

Hinkley Point C giant water intakes craned onto seabed

Video: contractors complete one of the world’s most complex marine engineering projects
3 days ago

Taziker revenue jumps 30% to record £73m

Multi-disciplinary engineering specialist boosts headcount to 366 staff
3 days ago

Consultant buys scaffolding contractor

RSK Group makes MG Scaffolding its latest acquisition
3 days ago

M&E specialist gears up for £16m Aston Martin package

Major package award on McLaren Silverstone site
3 days ago

Plans in for Brentford 110-flat canalside scheme

Makers’ Yard mixed commercial and residential use scheme
3 days ago

WSP to buy consultant RPS Group for £591m

5,000 staff at Oxfordshire based firm to join WSP
4 days ago

Countryside puts offsite factory up for sale

Offers invited for Bardon plant which is less than a year old
4 days ago

M&E specialist Spie UK arm returns to profit

French parent group launches a strategic review of UK operations after performance stabilises
4 days ago

Site boss fined for locking out safety inspectors

Police called to enter site before fire fighters rescue workers stranded on roof
4 days ago

Rebid starts for £200m M5 junction job

Cost inflation forces retender for £200m junction 10 rebuild near Cheltenham
4 days ago

New Downing Construction boss named

Andy Thomas takes top job as Ian Orton steps back after 24 years
4 days ago

Plans in for 600 homes at London Aylesbury estate

Notting Hill Genesis aims to start work next year on phase 2 of Southwark estate rebuild
4 days ago

Tide gets green light for UK’s tallest modular tower

Volumetric specialist to build 48-storey student skyscraper at Canary Wharf
6 days ago

TopHat cuts losses and aims for profit in three years

Modular specialist investing for future as latest results show £19.4m loss
5 days ago

Story Contracting names next chief executive

Andy Joy to be promoted to CEO as Jason Butterwork becomes vice chairman
5 days ago

Stalled £100m North London build-to-rent tower to start

Essential Living commits to start Swiss Cottage scheme six years after planning OK'd
6 days ago

Contractor services