Is it the End of Travel Expenses for Umbrella Companies?

How the 2014 Autumn Statement Will Affect Umbrella Companies

A recent government announcement could have a real effect on the continued use of Umbrella Companies in the UK’s Contracting sector. George Osborne, in December’s Autumn statement commented on the government’s concern of “the growing use of overarching contracts of employment by intermediaries such as umbrella companies”. 

Currently, Umbrella companies are structured to take advantage of the tax expenses rule that allow travel costs to a temporary work place to be claimed back, tax free.  The employee of the Umbrella company then benefits from this by receiving their remuneration as a mix of salary and the reimbursed expenses.   In order for this to work, the Umbrella company relies on their worker being treated as an employee with temporary work sites which is achieved by the Umbrella Company using overarching contracts of employment. 

The impact on the Umbrella sector could be significant if HMRC remove their ability to achieve these tax savings, as costs to Umbrella Companies will go up and income for Umbrella company workers will go down!

For more information on this subject please take a look at the article below;
http://www.osborneclarke.com/connected-insights/blog/Autumn-Statement-2014-How-will-it-affect-Umbrella-companies/