We remain in a “wait and see” phase as decisions surrounding the country’s political outcomes and the Brexit end-game consume attention. With all that is afoot, real clarity may take some time.
We are also seeing HMRC and all those in the UK employment supply chain mulling over the impending IR35 changes that will come into force in April 2020 impacting the self-employed, freelance and wider “gig economy”.
Justifying your employment status to the tax man
Whilst the move to working alone and turning away from employment has been a significant trend over the last few years, it’s becoming increasingly difficult for a lone worker to justify their employment status to the tax man.
With a range of statuses, from sole trader to freelancer or contractor operating through your own limited company, to being in a partnership or LLP (if there are more workers than just you), to being paid by an umbrella company, each route has, and is receiving more scrutiny from not just HMRC, but all players in the supply chain.
Umbrella companies as the first point of call
For many contractors embarking on a new contract the first port of call is often an umbrella company for payroll and associated services.
In simple terms the umbrella company acts as your employer and once you’ve signed a contract with your Umbrella they will pay you. They will make deductions of taxes, provide you with statutory pay where appropriate, arrange a workplace pension for you, provide you with insurance and deal with HMRC on your behalf.
Some umbrellas will provide you with other benefits such as discounts on certain products and services, offer childcare vouchers and as a matter of course deal with your agency and provide references when required.
On a cautionary note as your employer, all umbrellas should calculate your pay in exactly the same way. Those who promise retention of 80% or more of your pay will probably not be compliant. Beware of tax avoidance schemes!
From our Manchester HQ we have a dedicated team of advisers who between them have over 60 years’ experience in dealing with umbrella, payroll and associated contractor services.
The team has a vast number of umbrella companies as clients and are on hand to assist with your enquiries. We’re FCSA partners and have a detailed understanding of the UK employment supply chain so no issue you have is a problem for us.
There has never been a more important time to speak with a broker that understands your market, risks and insurance solutions as umbrella companies have seen unprecedented change of late – with potentially more change to come.
In a recent blog, Contractor UK noted what to look for in a compliant umbrella company and allayed a few myths.
Stricter compliance regulations on the horizon
On the broader subject of compliance the FCSA, who is the recognised ‘go to’ body for all relevant matters relating to supply chain compliance for the temporary labour market, indicate that in terms of umbrella regulation, this will be going ahead through expanding the remit of the Employment Agencies Standards Inspectorate.
This body is currently responsible for enforcing agency conduct regulations. Expanding their remit will require primary legislation, so as things stand the exact timeframe is unclear but widely expected to be in place for 2020. Once their remit is expanded, specific regulations for umbrella companies are likely to follow.
Whatever affects the employment, self-employment and umbrella sectors Caunce O’Hara will be ensuring that their range of bespoke Umbrella insurance will adapt as required. Those who are currently unsure or who seek advice on appropriate coverage issues and policies can speak with an expert in confidence.
For more information you can contact Mark Lloyd, Umbrella Account Executive on 0161 833 6946