Tag Archive | "umbrella companies"

Public Sector Contractors Walk Out – “had enough” They Say

As you might be aware, changes are about to happen in the public sector with thousands of contractors facing disruption to their tax situation.

It is the IR35 tax change that has got everybody up in arms, and the reason is because many contractors who work in the public sector will end up paying more tax, something which many of them don’t want to do, obviously.

This has lead thousands of contractors to simply down tools and walk out. “I’ve just had enough,” said one contractor who wanted to remain nameless. No doubt they are leaving the public sector and going to offer their services elsewhere in a bid to avoid IR35.

What were the government expecting though, did they really think people would take it? Reports suggest they came up with the idea of changing the IR35 system in a bid to make £440 million a year from 20,000 hard working contractors in the public sector.

What they didn’t expect was that many of these contractors are going to walk out and never go back. Looks like it’s back to the drawing board for the people at government HQ.

One of the biggest areas of the public sector that hires contractors is IT with an estimated 18,000 on the books of Central government.

However, many reports are saying that IT contractors are the most affected by IR35, and they are not impressed at all. One example is a recent defence related IT project that is no doubt crucial for the nation…but 87 of the contractors working on that project have already left, with many more expected to follow.

It’s also come to my attention that another project involving public sector contractors, this time consisting of security consultants…well, almost half of the people in that team have already moved on to the private sector.

Let’s be honest here for a moment. Is it really a surprise this is happening? Of course it isn’t, mainly because people don’t like to lose money. Simple really isn’t it, but for some reason the organisers behind the IR35 change just couldn’t see this. Or maybe they did and just don’t care? Who knows exactly what is going on here.

What I do know is that at the end of March thousands more contractors officially come to the end of their public sector contracts, and guess what…many are not going to be renewing.

Instead, they will go boldly into the private sector, where they are not going to be subjected to this IR35 madness.

The only way they will go back is if the government decides to not go forward with the IR35 tax change, but I don’t think that is going to happen.

In the meantime thousands more public sector contractors are going to be walking out and going elsewhere.

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New Mortgages for Self Employed Launched

I’ve talked before on this blog about how difficult it can be for contractors to get a mortgage or any kind of loan. For many people it’s almost impossible.

It has just come to my attention that two companies are trying to change that, by launching a new range of mortgage products that are aimed at self employed people.

In other words, if you are a contractor or have an umbrella company and you want a mortgage, then it could just be the solution you have been looking for.

Paragon Mortgages and The Mortgage Lender are the two companies offering the new range of mortgages, with an emphasis by both of them on lending to people with “complicated sources of income.”

If you’ve applied for mortgages before, only to be told the only way to get accepted is to provide 10 years worth of wage slips or to have initial enthusiasm from a lender, but then to get declined when you tell them you are self employed…maybe this could be the answer? It is worth getting in contact with these companies if you ask me.

I’ve always got self employed people telling me they just can’t seem to get a mortgage, with the main reason being their income is not as easy to work out as someone who is employed in a job.

Not only that, but when you have only been self employed for a year or two, then mortgage companies are going to be a bit more hesitant in giving you the cash.

This isn’t the wild west days of lending that we witnessed a few years ago. We can be thankful for that of course, because if it continued then the UK economy was heading for disaster.

However, it is possible that lending has gone a bit too far the other way just recently, especially for self employed people, and I think that needs to change. Let’s wait to see if it does with these two new mortgage companies entering the scene.

A spokesperson for Paragon Mortgages said, “customers with complex incomes looking for a residential mortgage deserve access to a wider choice of mortgage products.”

Typically, with a bank or any kind of mainstream lending company, they will process your application using their automated technology As soon as it comes to the part where you are self employed, their system automatically declines your application.

With specialist companies such as Paragon Mortgages and The Mortgage Lender, they are more prepared to look at your situation and spend time going over the smaller details. That doesn’t mean you are guaranteed to get accepted, but at least you know you will get treated fairly.

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Research Shows Self Employed Work 10 Hours Less

If you thought working for an employer was the best option then it’s time to reconsider, as new research shows self employed people work 10 hours less a week.

Not only that, but the research also shows that they make £5000 more per year than the average salary, bringing in £33,000 a year compared to £27,000.

This includes umbrella contractors of course, and it doesn’t surprise me one bit as I’m always hearing stories of people who quit their job to become self employed and are now making more money working for themselves.

These statistics were all taken from the “definite study of the self employed” where 5,010 people in the UK were surveyed. Of those asked, 67% commented they were now better off financially now than when working for a boss, with 65% saying they now have more time to do the activities they want.

I’m sure they do, because when you think about it, if self employed people work 10 hours less a week, then based on a 5 day working week that is an extra 2 hours a day. Who wouldn’t want that? It’s much better to be spending time with family and friends rather than sitting at an office desk or being in traffic on the way home.

It’s also worth noting that many self employed people do work from home, or are at least based from home. This means that the commute is often no longer there, which means the time you save from working for yourself might even be more than 10 hours a week.

So why are more people than ever before starting to look at becoming self employed? When asked in the survey, 77% said they wanted more control of their work day, while 65% said the thought of being their own boss was something they liked.

Interestingly, 47% mentioned that lack of workplace politics was a motivating factor. This is something that I hear a lot, as it seems that many companies are now more like a high school drama than a place of work.

It’s much better to work on your own in my opinion, although this isn’t something that appeals to everyone. Some people would prefer to have the office politics I guess, and if that is your thing then becoming self employed might not be for you.

Although the research does show that self employed people work, on average, 10 hours less a work than people who have a job, don’t forget that it is not always like this at first. When you start working for yourself you might have to work more hours, so make sure you are aware of that.

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Minimum of £67,000 Would get Contractors to Quit

What would it get you to quit the contracting lifestyle and back into employment? A new survey found that an offer of at least £67,000 a year would do it.

For many people though, not even an offer of two or three times that amount would get them to give up on being their own boss and going to work for someone else.

When you consider that the average salary in the UK is £27,000, it just goes to show you that contractors really enjoy what they do, and it isn’t just about the money.

There are many contracting professionals that earn more than £67k a year of course, such as the ex Google employee who gave up a cushy 6 figure salary to start working for himself…and now he makes more and has more free time.

I think that is what it all comes down to at the end of the day…having more free time and doing what you want and when you want.

People that are employed and working in an office all day can’t do that, but when your office is your kitchen table and you don’t have to get out of bed until 9am, then for most self employed people even £67,000 wouldn’t be enough to get them to start commuting to work again every day.

It’s what I keep telling people all the time…most contractors really value their time and doing the things they enjoy like going to the being with family, gym, sports, travel, and hobbies. When you are self employed then you set your work around these kind of activities, rather than the other way round.

In a different survey where employed people were surveyed, 42% said they would like to start their own business or become a contracting professional within the next 5 years. This doesn’t surprise me at all, and it just goes to show how the dream of becoming your own boss is now becoming a reality for millions of UK residents.

Some experts are even saying that 50% of the UK workforce will be self employed within 10 years. You know, I think that is a bit optimistic, but the fact is that more people than ever before are deciding to go it alone…whether it be as a contractor, freelancer, gig worker or by starting a business, so I could certainly imagine a time where half of the workers are self employed.

For now though, to those of you who are self employed enjoy your more free time and less hours working, but if you did receive an offer for £67,000 tomorrow then it would certainly be a nice choice to have, although for the majority of you I think I know what the answer would be.

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Umbrella Contractors Lose £5000 a Year

According to the IPSE, umbrella contractors in the UK are losing 5 thousand pounds a year because of unpaid work.

This information has come from a survey the IPSE (Association of Independent Professional and the Self Employed) conducted recently, where they asked 946 umbrella contractors, freelancers, and general self employed workers about their experience of unpaid work.

Interestingly, the survey found that contractors in creative industries are more likely to work unpaid as opposed to contractors in tech industries.

Why are so many people working for free? Sometimes it appears that clients simply are not paying, which ultimately means they end up doing the work for free, but other times it seems the contractor agreed to do the work for free, either in a bid to get experience, or to get noticed by certain companies.

This has prompted many contractors and freelance professionals to come up with the #NoFreeWork hash tag on Twitter, in a bid to educate people on why they shouldn’t work for free, even when starting out.

It might appear to be a good idea to work for free when you have no clients, but ultimately it is just a way to get taken advantage of.

Bizarrely, 20% of those who took part in the survey said that working for free was a standard practice in their industry.

I really don’t get this at all…who would see working for free as a “standard practice?” Perhaps they don’t have bills to pay, but it really isn’t a good idea to do any kind of work for free as it doesn’t put value on your time.

If a potential client starts to talk about standard practice and all of that nonsense, then ignore them and go to the next one. If you are in an industry where nobody wants to pay, then I think it’s time to move into another industry, one where clients understand the value of what you are offering.

What about companies that think nothing of hiring freelancers and then not paying them for their time and work? In my opinion, more needs to be done here to stop people getting away with this.

Maybe a small business commissioner could be installed by the government to get involved when clients don’t pay, or maybe umbrella contractors should simply begin taking payments upfront, especially when they haven’t worked for a client before? Something needs to be done.

It even appears that in some industries you can’t even get free work, as 40% of those surveyed commented that they usually had competition for free jobs and very often didn’t even get them.

Some might argue that if people are willing to work for free then let companies take advantage of that. To a point I agree, but ultimately I think nothing good will ever come from a something for nothing mindset, and you will get to a point where the skills on offer won’t be very good quality.

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FCA Concerned About Mortgages for Contractors

It wasn’t long ago that umbrella contractors struggled to get a mortgage, but now the opposite is true, and the FCA has spoken about their concerns.

In short, what they are saying is that many specialist lenders are not doing enough checks when lending to contractors and the self employed in general, and this is resulting in irresponsible lending.

Their main issue of course is that many contractors may very well end up borrowing money they can’t afford to repay, sending them right into years of debt.

The Mortgage sector manager for the FCA, Lynda Blackwell, spoke recently at the Mortgage Business Expo where she voiced her concerns, specifically around the issue of some lenders only asking for 1 years worth of trading or business records when making their decision

For once I actually agree with the FCA here, because if there is one thing I don’t like to see it’s lenders giving out money without the proper checks needed to determine if someone really can afford to pay back the money.

Let’s face it, 1 year of records for a contractor, freelancer, or business owner is definitely not enough to make an informed decision about whether or not their income is consistent.

It’s this kind of lending that led to the economy crashing back in 2008. Surely we don’t want a repeat of that in 2016? Hopefully, with the FCA now addressing the matter measures can be taken to ensure the same thing doesn’t happen again.

Yes it’s important that contractors have the same kind of access to mortgages as those who are employed in full-time work, but that doesn’t mean they should just get approved with a few basic details.

So what kind of trading records are acceptable? Lynda Blackwell seems to think it should be 3 years, although personally I still think this isn’t enough.

In my opinion, and I’m sure many contractors will disagree with me, I say that a minimum of 5 years records is what the self employed must have in order to get a mortgage.

The reason? We all know that being self employed can be inconsistent, with 1 year being great and the next being totally the opposite, and this happens for a number of reasons, with many different factors at play.

When you have 5 years of trading records then it shows consistency, and gives the lender a better idea of exactly how your income has been and what it should look like over the next 5, 10 and 20 years.

Of course, every situation is different and in some cases a contractor or small business owner may have assets they can secure against the loan in order for the lender to be more confident about giving out a mortgage.

In this scenario 5 years of records are probably not required, but I would guess in 90% of mortgage applications they are.

Let’s just hope that common sense wins the day and we don’t have thousands of contractors in debt and having no way to pay their mortgages in a few years time.

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Experts Say Making Tax Digital is Too Soon

Most umbrella contractors are by now aware of the plans to make tax digital (MTD), but some people wonder if it might be rushed.

The chair of the Treasury Select Committee has recently wrote a letter to our new chancellor Philip Hammond giving him a reminder…”It’s better to get it right than to stick to a rigid timetable.”

You know, this is exactly what I’ve been saying ever since I discovered the plans for making tax digital, as the government do seem to rush into these things without the proper thought and planning that is needed.

Let’s just say that many contractors might find themselves in a position where it is harder to do their tax, especially if the system is not finely tuned. Do the government care though, or are they just going to keep on going with their original plans? I think we all know the answer to that.

Another respected organisation, the ATT, have also mentioned they have concerns, mainly around the fact that the government were not taking enough time listening to feedback from experts.

In other words, they have decided to move forward regardless of what people think, and without any thought to if this whole “making tax digital” is going to work in the real world.

One of the main issues that has been talked about extensively is the plans to make all self employed people do their tax on a quarterly basis instead of once a year.

In theory this could have been a good idea if the whole process was really simple and it only took you 15 minutes a time, but in reality is that going to happen? I don’t think so.

It will be more time consuming if you ask me, as hard working contractors and business owners around the country will have to put time in their schedule to focus on doing tax returns 4 times a year rather than just once.

In a way, I understand the government’s reasons for coming up with this idea, as in theory it should make doing tax easier. However, they are not understanding the simple fact that most self employed people put off doing their tax for one reason and one reason only…they don’t enjoy doing it.

Now we are going to have a situation where people have to do it 4 times a year. Well, they are not all suddenly going to start enjoying it are they? Instead, it is just going to be something they don’t want to do 4 times a year now rather than just the once.

As always though, we can only wait and see what happens with this. Maybe the government will come up with something that is easy to use and makes the whole process of doing tax enjoyable. I doubt it, but you never know.

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Research Suggests IT Contractors are Confused

We all know that IT contractors are in huge demand right now around the UK, but it seems that many of them may actually be confused.

How so? Well, new research has uncovered that many of these IT professionals are confused about the contracts they have with many of the leading tech firms.

As we all know, these umbrella contractors work on a temporary basis, many with contracts that range anywhere from a few days to a couple of months, although sometimes it can lead to a more permanent arrangement

The research suggests that 70% are confused about their contracts, with the majority of those surveyed admitting that they need help better understanding the written agreements they currently have.

To put it in plain English, a lot of these tech firms like to hide things away in the terms and conditions, and very often, this doesn’t work in the favour of IT contractors. It’s not uncommon to see contracts ended early or pay to be withheld, all because there is small print hidden away in the written agreement.

Let’s face it, the vast majority of umbrella contractors are not lawyers and do not have a law degree. This means they are often at a disadvantage when negotiating with these big firms and it is far too easy for them to get a deal that doesn’t benefit them.

I’ve been saying for years that umbrella contractors need more free support when it comes to negotiating their contracts, and it should be the government offering this kind of service.

Not only that, but watchdogs need to look more closely at the behaviour of some of these tech firms and their big powerful legal teams, who are usually more than happy to put the contracts completely in their favour, even if it means the IT professionals lose out.

Luckily, it appears that things are being done to help out those most in need. One example is a 3 part guide that has just been commissioned, which has the goal of solving many of the problems that umbrella contractors have when negotiating deals.

This is definitely a step in the right direction, and it just goes to show there are resources available for IT contractors, and any type of contractor, that wants to get more knowledge when it comes to the negotiating table.

Now of course, I’m not saying that everything should be in the contractors favour and that technology firms should just let them call all of the shots. It’s just that if the playing field is a bit more level then everything will become more fairer, which in the end should result in more productivity, which in turn is better for the economy.

At the end of the day, in this post Brexit world we need to be supporting each other more than ever, so that our country can get the economy it deserves once again.

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Now is “Perfect Time” to be a Contractor

A recent industry report from respected organisations within the UK suggests now is the right time to be an umbrella contractor.

This is something that many of us have known for years of course, especially when you consider there is no better feeling than getting rid of your boss and setting out on your path.

However, according to the industry report, the market conditions for contractors are “perfect” right now, which means if you have been thinking of going out on your own then it really doesn’t get any better than right now.

You might be saying to yourself “I will wait until next year,” but ultimately, next year turns into the year after, and then on and on. The time is right now.

So why is right now the perfect time to get into the contractor lifestyle? One of the main reasons is the lack of talent in many cities around the UK, which has led to many companies bringing in the skills they need from the outside.

For example, things like web design and IT security are really in demand at the moment, so if this your forte then you might want to look at taking the next step in your career.

Another reason is because there is just so many different ways to connect with companies in the UK, and around the world, in order to offer your services. This has gave us a so called “gig economy,” where contractors are using their skills to fill vacancies that fit around their own lifestyle, rather than the other way round.

Ultimately, this has led to more freedom among contractors and freelancers in general, with many people even choosing to live abroad or go travelling while they are still working.

My opinion? I agree completely with the new report, and wouldn’t be surprised if many new people start entering the contracting market to take advantage of the great demand we currently have.

One thing is for sure: the UK economy is really going to benefit from having such a strong foundation of umbrella contractors working away in successful companies up and down the country, and it might just mean that we get through this tough adjustment post Brexit, and go on to become a force to be reckoned with no matter if we are in the European Union or not.

Bottom line…start taking action if you think being a contractor would suit you. Even it means working part time in the evenings and at weekends until you build up a client base. At that point, you are in a great position to quit your job and fully focus on what you really want to do.

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IT Contractors Accept Lower Pay Rates

It seems that umbrella contractors working in the IT sector have decided to accept lower pay rates from Clydesdale Bank in a move that has left some experts shocked. It is estimated that these freelance temporary workers have agreed to a 10% reduction in the amount of money they are paid, although a few financial analysts have predicted it could be as much as 15%.

Unfortunately, this is a move that many people saw coming on the horizon, with a few pundits saying it is necessary in order for the freelancers to keep their jobs and hold on to valuable contracts. While not everybody is happy about the drop in pay, and let’s face it, who would be…there is an air of acceptance about the whole situation as they realise that daily rates with the bank are down as much as 15%, with some predictions putting it almost at 20%.

Clydesdale Bank are a major employer of umbrella contractors, and many of their brands are well known throughout the UK, including Yorkshire Bank which is popular among consumers, and has been for many years. However, when you consider the way in which this has been handled, with many freelancers refused contract extensions if they didn’t accept the new terms and pay rates, then it’s easy to see why their image may take a bit of a hit over the coming months.

It is always difficult when you expect people to do the same work for less money, and this leaves some of the IT professionals considering their options about what they might want to do in the future. Perhaps a career change might be on the cards for a percentage of those workers affected? At the end of the day who could blame them, especially if they can find higher pay elsewhere in a different industry.

Ultimately though, it seems that many of the umbrella contractors are happy to move forward and continue offering their services to Clydesdale Bank. In particular, one contractor who wished to remain nameless commented that while the lower rates were not ideal, the rates are still pretty decent…which just goes to show that even when a company offers contractors less pay, there are many who stick around and continue to offer their services.

IT experts have warned the bank about the quality of freelance professionals it will be able to attract in the future though, especially if they decide to drop the pay rates even further. This particular field is very competitive, and there are sure to be other companies out there hoping to lure the most qualified contractors with offers of higher pay and more bonuses. This could lead to Clydesdale Bank and other banks who follow the same path into a situation where the quality of work is not as high, which in the end leads to a reduction in the service they offer to customers.

Only time will tell if this affects the bank and its profits in the future. One thing I do know though, is that if they drop the pay rates any further then umbrella IT contractors should definitely start looking elsewhere.

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Umbrella contractor pay levels up year on year

Despite everything, pay levels for umbrella contractors are actually up year on year, even if it seems impossible with the current market conditions.

Right, so let me get this out of the way now: yes, I know you’re pretty much in disbelief that pay rates are up in comparison to last year. The fact that advertised salaries for umbrella company contractors has dipped in recent weeks makes it even harder to swallow, but the fact is that it’s true – or at least that’s what the latest job market report from Adzuna says.

The data show that when it comes to limited company and umbrella company contractors, the last 12 months from August 2015 has seen demand rocket upwards. The main culprit is thought to be the skills shortage, as businesses scrambled to find the right mix of workers that had the requisite skills they needed to continue growth. In fact, the last 12 months has seen job vacancies grow by around 2 per cent due to the inability of firms to find permanent workers, resulting in business owners turning to contractors and other temporary workers instead to keep up with demand.

Still don’t think opportunities for contractors have grown historically? Take a look at how things have changed from August of 2014 – since then, there are 27.1 per cent more job roles waiting to be filled. And yes, the average pay rate has dropped by around 0.6 per cent, but rates for contractors has certainly bucked this trend. Adzuna found that temporary HR workers saw their salaries rise by around 3.1 per cent, while contractors working in the travel industry went up by 3.6 per cent. Additional sectors such as information technology, the sciences, and construction have all seen their rates go up by 1.8 per cent, 2.2 per cent and 2.7 per cent respectively as well, so it’s not limited to just a few industries.

So it’s not some big secret. The skills shortage is making freelancers and umbrella contractors a hot commodity right now, and that means anyone working for themselves is going to benefit greatly when it comes to looking for new, lucrative temporary contracts. It’s not so good for permanent workers, of course, but it’s not your fault traditional employees don’t have the requisite skills and talent British businesses need to fill these roles, now is it? Honestly you’re just doing your job – so keep doing it, and enjoy it while it lasts; nobody knows what’s around the corner, what with Brexit looming in just a few weeks!

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Flexibility attracts Brits to contract work

New research has shown what umbrella contractors and freelancers already know: flexibility is a massive draw when it comes to the self-employed.

File this one under the “things we’ve been saying for years” category: freelancing offers the kinds of perks that make Brits happier with their lives overall. Ask anyone who works for themselves instead of as a permanent employee and they can tell you that contract workers have so much higher levels of flexibility compared to a traditional employee that it just isn’t funny. Choosing your own hours, your own projects, and your own workspace means never having to sit in traffic during your morning commute unless absolutely necessary – and even better, most temporary positions tend to offer better earning opportunities while also providing an enhanced work-life balance.

Well, there are official figures to back up these claims. A new research study found that almost one out of three freelancers favoured working as a self-employed contractor because it provides better control over work-life balance. Meanwhile, 39 per cent said that better earning opportunities were the biggest draw; 37 per cent chose increased flexibility to select their own working hours as the best thing about working as a freelancer or an umbrella company contractor.

The research was conducted by US-based business supply company Staples, and as such the figures represent the attitudes of American contractors. While this of course doesn’t offer any exact data on British freelance workers, it does reflect a wider trend internationally – with one out of every workers in the UK considered to be self-employed, motivations of British contractors are likely to be more or less in line with the collected data.

The benefits to employers were touched on by this new study as well, as firms looking to fill vacancies often have a larger pool of candidates to choose from. This is absolutely true in the UK, as we’ve got this little thing called a skills shortage that has been making it difficult for employers to find qualified permanent employees – especially as an increasing number of Baby Boomers are transitioning out of the workforce and settling into their new pensioner lifestyles. Additionally, with the trend towards remote working growing not just in the UK but internationally, employers have massive resources at their disposal if they do choose to find a temporary, project-based solution to their staffing needs. Coupled with the benefits of controlling their payroll expenditures through using contractors, is it really any wonder how popular using freelancers has become in the employment sector?

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Aberdeen new hotspot for creative SMEs

When it comes to creative SMEs, freelancers, or umbrella companies, Aberdeen is the newest hotspot in the UK according to a new research study.

This year’s Small Business Outlook report, put out by the Centre for Cities think tank, found that Aberdeen was the top choice for professional, digital, and creative sector workers when it comes to small and medium-sized businesses in the UK. This includes freelancers, contractors, and sole traders of course. Rounding out the top three cities were Reading and Cambridge, while the tried-and-true favourite of London was in the top ten cities.

I have to say I’m a bit surprised to see Aberdeen as the top choice, as it’s not exactly rolling in the dough thanks to how the oil and gas sector in the North Sea has certainly bottomed out recently. Apparently, creative industries are filling the gap left by the oil and gas market and then some, which makes me feel much less nervous about the economy as a whole.

On top of that, this certainly shows that non-traditional centres for work like Aberdeen can most certainly make a case for further devolution, don’t you think? Whatever opinion you may have on the issue of Scotland’s recent (and failed) vote for independence, more devolution is more or less universally a good idea. If Aberdeen is going to continue to be a local bastion of excellence when it comes to creative industries, local governments need the ability to support the city’s infrastructure and to have better control over its spending – and that means less decision making has to come from Westminster. The world doesn’t revolve around London and the Midlands, whatever Parliament may think, and this most recent study from Centre for Cities is proof positive of this idea – despite what MPs might think.

Business rate devolution in Scotland, which is coming in 2020, is definitely a step in the right direction and it’s one I’d like to see pursued further. That’s five years away after all, and we need to come up with solutions to support cities like Aberdeen today rather than half a decade down the line. I know this is not something that’s bound to happen, considering how slow policymakers move on more or less every blessed thing they have their hands in, but at least I’ll go on record by saying that we should support business efforts in “far flung” regions like the Scotland and the North. This is especially important with oil and gas dropping off such as it has; we can’t put all our eggs in one basket, and supporting creative industries in Aberdeen is part and parcel of doing just that, don’t you think?


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Would a third tier work system sort out UK taxation?

One of the great anomalies of UK tax is that there’s no clear definition of employment. Not what constitutes a role, per se. Rather, what defines the status of the worker carrying out that role.

It’s this ambiguity between employment and self-employment that accounts for many tax discrepancies. But rather than try and make a true divide, the last Autumn Statement did the opposite.

Umbrella workers who’ve enjoyed travel and susbsistence relief will, from April 2016, no longer benefit. Instead, anyone continuing to claim these benefits will go straight to PAYE, do not pass Go!.

So, yes, you can still contract through your pay-roll provider. But what you earn will be subject to the same tax as permanent employees.

Now, if you’re self-employed, you pay Employer’s as well as Employee’s NICs. So only those with more money than sense will continue to claim travel and subsistence relief after the act.

This is exactly what the taxman wants. Umbrella workers themselves don’t want this change. Nor, as is likely, do clients who utilise short-term contractors to optimise their own bottom line. This is a benefit for the taxman, no one else.

The government has provided a large window for those who want to opt out of this type of payment structure. There are talks being held to discuss the finalised legislation, with all manner of stakeholders purportedly being represented.

The Rise of the Dependent Contractor

An article on smallbizlabs this week points to possible solution. Highlighting a similar situation in the US, this article centres on the imparity in the sharing economy.

There’s a clear-cut definition of working roles in many states. Whether that’s by default or by design is anyone’s guess. But workers have two clear identities:

  1. independent contractors;
  2. employees.

Similar to the UK, contractors are self-sufficient when it comes to pay and holidays. Employees in the US also receive similar benefits to those availed of ‘permies’ here.

But they’ve got a blurred line appearing, too. Two juries in California will soon preside over cases where clients use car-hire drivers, contractors by trade, in an almost full-time manner.

The cases will consider whether the drivers should be entitled to the benefits that their respective employers’ offer to their permanent employees.

Many of you will say, “Well, you can’t have your cake and eat it.”

But with the high profile cases of tax avoidance from global multinationals so prominent in the media, it’s clear that you can. Not only have your own cake, but take a fair slice of someone else’s, too, if you have the accounting nous.

A step backwards for the UK self-employed workforce?

The buzz surrounding these two precedential cases conveys the need for a middle ground. Not a middleman – there are far too many of those, already. The term they’re using to peg this middle ground is “Dependent Contractor”.

Allegedly, Canada and Germany have defined and cater for such a workforce already. The dependent contractor enjoys some of the perks of permies, but retains some of their independence as a self-employed entity.

Sound familiar? Yes, it’s pretty much the way Umbrella Companies work here in the UK.

The “rise of the dependent contractor” is expected to manifest in the US in the next 18 months. So you have to ask why the Conservative government is looking to devolve that way of working in the UK.

Again, the powers that be may not mean to be destroying a way of life. But then, the FSA never ‘meant’ to kill off the self-cert mortgage, either.

Let’s hope the interested stakeholders get a loud enough megaphone so that all opinions are heard when the talks discussing intermediaries take place. With the economy rising at only 0.3% (Q1 2015), we cannot erode the economic bottom line further by increasing pay-roll and intermediaries’ costs.

With the UK self-employed populace continuing to grow, the last thing we need is a step backwards. Especially if the bridge that was there has crumbled since the Chancellor’s passing.

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Skills shortage could impact Christmas shopping season

The Recruitment and Employment Confederation has added fuel to the fire when it comes to fears that the UK skills shortage is going to ruin everyone’s Christmas.

The run-up to the festive season is one of the busiest times for businesses not just in the UK but across the globe. Everyone ends up working like a dog to meet demand, especially in the retail sector, but just about every firm is busier than a one-legged man in an arse-kicking competition at this time of year. However, the REC says that based on its most recent research there could very well be a decided lack of available staff to keep up with Christmas demand.

Firms love to hire on temporary and contract workers at this time of year, especially since it’s just not cost-effective to add permanent employees for a few months only to make them redundant once January rolls around. The problem this year is that there’s a decided lack of skilled and qualified temporary workers to meet demand; the REC said that 21 per cent of firms with internal recruiting felt there was a definite shortage. Meanwhile, 23 per cent of firms that hire through agencies or umbrella companies reported the same thing.

This could be completely disastrous for capacity this shopping season, as companies that can’t keep up with the heightened demand in the run-up to Christmas aren’t going to be able to supply enough products or services to satisfy the demands of consumers – or the demand of other firms that need to supply secondary services to businesses that deal with consumers directly. I don’t know what’s going to happen this season, as there are only so many freelance personnel to go around and the best and the brightest are likely to have already been snapped up by firms. This leaves the dregs circling the bottom of the barrel when it comes to workers with the skills and experience these companies so desperately need this time of year.

There’s a few things that could happen, I suppose. One would be that firms make do with these under-qualified workers and try to push out as much productivity as they can, or these same firms will founder and end up having a poor Christmas season altogether. Neither option is completely fantastic, but if it’s a choice between under-performance and no performance I know what I would choose!

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Industry body launches umbrella company sector survey

A major trade industry body has taken it upon itself to launch a major survey of the umbrella company sector to determine its scope and value.

The organisation behind the new measure, the Freelancer and Contractor Services Association, says its interested in collecting as much data on umbrella company contractors and their companies as they possibly can. One of the main reasons behind this new study is to show once and for all to British policymakers that yes, umbrella company contractors make serious contributions to the economy – and that they deserve some more representation in Westminster.

Julia Kermode, the FCSA’s chief executive, said that it’s obvious that politicians and the Government aren’t exactly keen to recognise how much the umbrella contracting sector contributes to the UK’s economic prosperity. The survey is, in essence, a way to deliver reliable figures to naysayers and those turning their noses up at umbrella contracting in order to make them sit up and take notice.

This is why it’s so important for as many umbrella companies as possible to participate in the study, Kermode said. The more the merrier of course, but also the more complete amount of data that can be collected the more sway the survey’s results will have over those pillocks in Westminster who sometimes couldn’t find their arse with both hands.

Honestly I’m all for this new initiative. For what it’s worth, the Government most definitely doesn’t spend much time thinking about how it can help freelancers and contractors, even though these same self-employed Brits are the backbone of the British economy. It’s bloody frustrating to have to do all the work and get none of the credit, and it’s about time that someone did something about it!

I can only hope that this new survey ends up gathering some absolutely fantastic data and that it’s used to finally get some support for the nation’s hard-working umbrella contractors. It’s not exactly an easy life; while you may have the advantage of flexibility, contractors do have to scramble to ensure that they find their own clients. Without a steady pay cheque every month, it can be a thankless and stressful way to work – and contractors need more support to make their lives better!

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