Calling all Umbrella workers
Are you currently contracting under an Umbrella? Have you considered how the changes coming in April will affect you?
Read on to know what’s coming, what you’ll be losing and what you can do to make the right choice for you.
Announcements made in the 2015 Budgets, the Autumn Statement and the draft Finance Bill shook the UK’s 200,000 Umbrella workers, as the feared changes were confirmed. Fundamentally, Umbrella workers’ take home pay is under threat from increased taxation. Come April 2016 strict new rules are to be imposed. How will they affect you?
Your professional life will change
In April this year:
- Your tax relief on travel and subsistence expenses will be restricted, where you are subject to supervision, direction or control (SDC)
- You’ll automatically be deemed as subject to SDC by HMRC and your Umbrella must determine otherwise with the help of the client
- Greater compliance checks will be enforced
- Other expenses you claim will be taxed under PAYE
- By law you will have to submit a Self-Assessment Tax Return to obtain tax relief on other expenses
- Umbrella charges may increase to pay for the additional compliance
So what are your options?
- Be moved over into a Limited Company by your current Umbrella provider if (or when) they offer this service
- Run the risk of other untested models designed to avoid the changes
- Set up your own Limited Company
- Return to permanent employment
- Stay with your Umbrella and see if the model still works for you.
Many contractors work under an Umbrella because their services complement their professional requirements. But this is all about to change.
Umbrellas in their current form will need to implement major changes to the way they operate in preparation for April’s changes. What they will look like is as yet unknown, meaning they’ll be untested and unproven.
If contracting is a long term career choice, then it’s worth revisiting your options.
Tempted to go Limited?
If your current Umbrella provider is offering you their Limited Company services, it may be tempting (and seem easier) to stick with them. But you could end up paying more for a service that doesn’t meet your requirements. It’s worth checking out what specialist contractor accountants offer to make sure you’re getting the service you need to run your company smoothly and help you stay compliant.
We’ve compiled the essential checklist of what every Umbrella-to-Limited contractor should expect from their prospective service provider:
To help with your research why not download our essential checklist? You can do so by clicking on this link: The essential checklist (152 downloads)
Change is imminent, but it’s how you prepare yourself now that will put you in the best stead for April. Whatever decision you make, always ensure it’s the best one for you, both personally and professionally. Don’t be persuaded by your existing provider that their solution is your only choice.
Before you get caught up in your research, why not make use of our free take home pay calculator to give yourself an idea of how much you could be taking home as a Limited Company contractor.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.