Following various attention grabbing headlines in recent weeks I thought it worth stepping back and looking at what Umbrella companies actually do to help separate the facts from the myths.
In a nutshell Umbrella companies take on employees and provide services to Employment Businesses, in giving the workers Employment Status we also give them enhanced rights such as Holiday Pay, Sickness Pay, Redundancy etc. As employees, travelling to temporary work places on temporary assignments, they are also entitled to correctly treat their work location as temporary and therefore be paid their travel costs without having PAYE or NIC deducted. We therefore enhance the Employment Status and the Net Pay of the worker whilst at the same time reducing their administrative burden and simplifying their working lives.
HMRC agree that we enhance Net Pay but would have us believe that the above is tax avoidance, we don’t believe that treating a temporary workplace as temporary for tax purposes amounts to tax avoidance! It is simply the correct treatment of their payment for the week.
On the other hand UCATT would have us believe that we deprive people of employment rights and reduce their take home pay (note that they appear to disagree with HMRC). Again we don’t agree that giving a worker an employment contract and allowing them to claim back business related expenses is in any way making them worse off!
There is a possibility in scenarios where irresponsible headlines are banded about that a false impression is created and that all Umbrella companies are tarred with the same brush. It is true to say there are some Umbrellas who are non-compliant and run edgy ‘models’ and these don’t help the reputation of the industry. It is also true to say that where an Umbrella Company is operating correctly it both enhances the employment status and net pay of the worker in a perfectly compliant manner.
If you would like more information regarding any of the above please contact Mike Lowndes via mike@exchequersolutions.co.uk
