This week when speaking to a contractor, I got told: “your lot are finished, HMRC have seen to that.” Quite who my “lot” are, or how we have offended this gentleman – I don’t know. However, this did encourage me to go and do some research into what this chap had meant.
A quick Google search found me reading how the off-payroll changes would be implemented in the New Year. The information that stood out to me the most (and obviously the gentleman I was speaking with) was that payments made to an intermediary (like an umbrella company) would need to be made with the necessary deductions. Now I won’t bore you with the details, but essentially, ensuring the tax is removed and contractors are paid compliantly with HMRC rules and regulations is precisely what an umbrella company does. So, this did beg the question – what is the point of an umbrella company now?
For many contractors, an umbrella company is just a business that pays them – end of. As a result, the errant clause in the off-payroll changes would have signified the end to their use of umbrella companies. However, for some temporary workers, using an umbrella company is a choice and a choice that many see as a wise one and a partnership they value. Sure – they get the usual PAYE salary and know that they are paying the correct amount of tax, but they also get added benefits such as continuity of employment, rewards packages, statutory employee benefits, and more! When speaking to this gentleman, I got the feeling that he viewed umbrella companies as an enemy – and I did come to wonder why this was the case. Maybe he had been let down by an umbrella company in the past – who knows?
Over the years, we have seen some great umbrella companies! Umbrella companies that care about their employees and value the relationship they gain (many of these can be found in our top 10 umbrella companies).These companies are a credit to the industry and offer a genuinely valuable service to the UK’s flexible workforce. Unfortunately, these companies are often forgotten about when you hear tragic stories about umbrella companies that effectively see their employees at revenue streams – and nothing else. A majority of umbrellas know that in order to survive in a pretty crowded marketplace, they need to offer a brilliant service. Disappointingly, others are simply out there to line their pockets quickly. These types of companies won’t be missed by anyone should HMRC remove the main role of an umbrella company.
Since performing my research and pondering what the future of Umbrella companies would be in the off-payroll world, HMRC and the FCSA have confirmed that the legislation was poorly worded. As such, the part which threatened the existence of umbrella companies as a whole is being removed. The FCSA were incredibly quick to speak with the HMRC, which is one of the reasons why we only promote those who are accredited by them. When we look through the list of FCSA approved providers, we see respectable umbrella companies; companies which if the chap I spoke to earlier in the week had worked with, he would probably have had a good experience with. And, I’m sure he would have a different outlook on the role of umbrella companies within the temporary staffing and payroll industry.
If you are currently with an umbrella company that treats you poorly and not like an employee, it’s worth checking out our top 10 umbrella companies. Speak to any of them and I believe you will see the true value of umbrella companies to contractors. If more people did this, we would remove the negativity around umbrella companies and anyone who thinks umbrellas shouldn’t exist because they don’t care about their employees will hopefully have their perspectives changed for good. Oh, and another really useful resource is our Umbrella Companies Explained section. Check it and find out exactly what you should expect from a dependable umbrella.