The Final Nail in the Coffin for Umbrella Companies?

From 6 April 2016, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary. According to the Freelancer and Contractor Service Association (FCSA), this is expected to affect somewhere in the region of 400,000 umbrella company contractors. Individuals operating through a Personal Service Company will be glad to hear that they will not be affected by these changes, provided that they are not caught by the IR35 Intermediaries Legislation.

Umbrella companies have always been the less tax efficient route for the majority of Contractors and unfortunately this latest legislation will only serve to further reduce the appeal of this trading structure. So is this the final nail in the coffin for the Umbrella Company?

If you are currently using an Umbrella Company and would like further information or advice on the best trading structure for you given these changes, please don’t hesitate to contact us on 0800 954 2101 or email us at tax@freestyleaccounting.com.