Umbrella Companies, Alive and Kicking
October 9, 2015
Don't put Umbrellas back in the stand!
Yes, it is true, there has been a 12 week government consultation into ‘Employment Intermediaries and Tax Relief for Travel and Subsistence’, but it does not mean that it is the death knoll for all umbrella companies, as has been suggested by some accountancy firms looking to push the limited company route.
Nicky Owen, Director of Carrington Umbrella, has been involved in the consultation and has no concerns. Carrington Umbrella are the lowest priced umbrella provider offering payroll and PAYE services for contractors working all over the UK and will continue to offer advice on claiming expenses. Certainly the fee charged by umbrella companies will become far more important once the proposed changes take effect. Contractors paying higher umbrella fees will notice a significant decrease in their take home pay.
It seems that some people are scaremongering, putting forward worse case scenarios, before the consultation has been finished. Reputable companies, such as Carrington Umbrella, are looking forward to supporting contractors and freelancers with all aspects of their pay. They see it as a challenge to work within whatever new proposals are made to the existing tax system.
So, if these changes are implemented, what will it mean for temporary workers?
In most cases temporary workers will not be able to claim the cost of their travel to their place of work but there are exceptions. At a recent meeting with one of the representatives from HMRC gave the following example where in fact an element of travel costs will be allowed:
A contractor is working at company ‘ABC Ltd’ and their head office is in Bristol. He works at their HO so won’t be able to claim his travel from home to the HO (under the proposed plans). On one occasion he arrives at work and is informed that they need him today in their Exeter office and he must travel from the Bristol HO to their office in Exeter. The cost of this journey is still claimable.
Yes, it is true that some tax relief may be removed but this is not the only reason people use umbrella companies. Companies such as Carrington Umbrella will still be able to offer services such as;
Payments within 2 hours, weekly, fortnightly or monthly payroll.
Low cost fixed fees for contractors.
The ability to claim certain expenses they incur when working on a contract
Trained accountants and unrivalled customer service.
Now that the consultation is finished let’s wait for the announcements in the Finance Bill 2016, and implement them in April 2016, before putting the umbrellas back in the stand!