T&S reform not the end of Umbrella

Travel and subsistence (T&S) reform is not the end of Umbrella Companies says Julia Kermode, CEO of FCSA:

Firstly, it should be emphasised that T&S reform is not the end of umbrella. Why? Simple; the 400,000 contractors currently working through an umbrella are not suddenly all going to become permanent employees for two reasons – firstly there aren’t the vacancies to be filled, and secondly, many do not want permanent roles. Neither is it likely agencies will provide an in-house service instead, as this would mean significant changes to your business.

A fully compliant umbrella employer manages the commercial, employment, taxation, and statutory risks associated with the use of temporary workers for the supply chain. This minimises your overheads, your employment risk and your administrative burden of managing temporary workers, freeing you up to get on with what you do best.

I firmly believe that umbrella will continue in some form even if T&S reform removes this tax relief from most contractors. There is a reason why umbrellas evolved in the first instance, and contrary to popular myth this was not about wholesale exploitation of tax relief. Moreover it was borne to fill a need for contractors to have their admin centralised and for agencies/clients to outsource the management of their contractor staff to specialists.

So what will happen in the event that T&S relief disappears? It is likely that some firms with business models that are too reliant on this aspect of their business will experience difficulty. However the firms that are providing the full range of benefits are less likely to be hit as hard, because their business model has been built around a variety of factors.

There are undoubtedly some firms out there scaremongering and suggesting that their way is future-proof, which indeed it might be – but be cautious because until we see the exact nature of any legislative change there are no guarantees that a particular approach is future-proof.

The Autumn Statement on November 25th should provide some answers on what the future looks like, but in the meantime it is simply conjecture. So by all means explore what the market has to offer, but caution should be taken against a kneejerk reaction.

What can you do in the meantime to protect yourselves? Talk to your preferred suppliers about the potential changes, discuss the options and make sure they are prepared. It is important to work with partners that you trust. Be wary of firms that seem to be aggressively cashing in on the uncertainty. Don’t make snap decisions, trust your instincts and if something looks or feels too good to be true then it probably is.

Published on: 05 November 2015 - By: First Freelance

I'm an accountant myself but I must say I couldn't have done without the support of First Freelance. – Mugu S.

What I love is that they took the time to meet me in person. I certainly feel I can trust them. – Nadia D.

First Freelance have provided me with excellent support every step of the way. They genuinely care. – Bhargavi P.

The team are knowledgeable and their customer service is outstanding! – Chieme M.

I've worked with many accountants over the years. None have come close to First Freelance. – Daniel J.

They genuinely care about my business and personal finances. – Jennifer W.

First Freelance have provided me with an outstanding level of expertise. I highly recommend them! – Linda P.

I love having 24/7 visibility of my business finances. The 'live' business bank feed is an excellent feature. – Guido M.

What I love is that they took the time to meet me in person and explain everything clearly. – Olufunmilayo A.

REFER A FRIEND0203 962 5085EMAILREQUEST CALLBACKJOIN

Joining First Freelance couldn't be simpler, please provide some basic details and a member of the team will be in touch with you shortly!

Fill out this form to request a callback

You may want to consider:

There are additional factors you may wish to take into consideration. Simply fill in the
form below for a free personalised report tailored to your personal circumstances.

Sign up to our newsletter to receive important tax updates and news that is relevant to you.
We promise to never spam you!