Put away the brolly

February 5, 2016

For some time a contentious issue in the area of payroll and recruitment, it seems the Umbrella Company could soon become a thing of the past thanks to restrictions travel & subsistence expenses, and on particular types of salary sacrifice arrangement.

 

 

The umbrella model was in poor health even before the consultation on the T&S restrictions began back in 2015. Barely remarked upon - but nevertheless present in the finance act - was the restriction on expenses being offset through PAYE on an ongoing basis from April this year, if the payment model in question qualifies as a ‘salary sacrifice scheme’. 

 

Due to the current Umbrella model commonly being a salary sacrifice scheme, it stands to reason that something will have to change: The alternative is that umbrella companies repostiion themselves as nothing more than an outsourced PAYE employment model or payroll bureau. 

 

This still has the advantage of (in the former scenario) employing the workers directly under their own PAYE and taking on the employment and insurance responsibility rather than leaving this to end users or agencies. Time will tell whether this approach and the reduced benefits are enough to ensure survival.

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