Umbrellas are still a viable engagement mechanism for freelancers and the temporary workforce in spite of the introduction of Travel & Subsistence legislation introduced in April this year, according to the Freelancer & Contractor Services Association (FCSA), the UK’s largest independent trade association, whose members represent 120,000 freelancers and contractors.
According to FCSA research undertaken 6 months after the new legislation came into force, 7% of respondents – who comprised intermediaries within the supply chain – have noted an increase in demand for umbrella workers among blue collar workers and industrial workers, 15% of respondents have noted an increase in construction and 15% of intermediaries have seen an increase in education.
Results also showed that 75% believe that the percentage of umbrella employees now eligible for tax relief on their T&S expenses is just 10% or less. This figure will vary according to the specific job role and whether there is a right to supervision, direction or control. Before the legislation was enforced, 100% were eligible. FCSA research from 2015 showed that 60% of umbrella employees were claiming relief on their travel and subsistence expenses and the legislative changes have led to a reduction in take-home pay for these contractors.
Commenting on the findings, Julia Kermode, chief executive of FCSA said: “Despite the introduction of the T&S legislation earlier this year our research shows that umbrella is still considered a suitable option for the UK’s flexible workforce, as well as agencies and end clients. In the majority of cases, umbrella employment is a positive choice and enables workers to undertake a number of temporary assignments, whilst having full employment rights, statutory benefits and continuity of employment – it’s not just about expenses.
“I am pleased that the removal of travel and subsistence relief has not been as damaging as we anticipated and with IR35 changes set to go ahead in the public sector from next April it is encouraging news for umbrellas that they could once again be the chosen mechanism for hirers who do not want to risk getting IR35 status wrong.”