Unfortunately, for many of us working with recruitment and payroll companies, the labour manifesto is a lesson in how to plan for disasters rather than what to do when they strike.
Banning Umbrella Companies
Labour plan to ban umbrella companies. In principle, the policy has fairness at heart. It means that the employed will be ensured of worker’s rights and we will fund our national services with taxes paid at the fair rate.
Prioritising Tax Revenue
We all agree that big business should pay its fair share, but a manifesto pledge to target contractors and freelancers is a little short-sited.
Many believe that targeting entrepreneurs at the lower scale of the economy is counter-productive. It both stifles growth and alienates a voting public.
We spoke with Steven English, Managing Director of umbrella company eQuidity.
Here’s what Steven said about the proposed reforms:
“Labour seem to not fully understand and appreciate the benefits and workings of compliant umbrella companies. It appears as though Labour, are basing their decision on negative publicity associated with non-compliant umbrella service providers.”
We asked Steven to explain a little more and his response shows that the issues of worker’s rights is centric to umbrella companies.
“Compliant umbrella companies genuinely employ tens of thousands of workers across all industry sectors. Umbrella Companies collect and pay millions of pounds in tax to HMRC and provide workers with full employment rights.
“Labour obviously does not understand how a compliant umbrella company operates. It would be ill-considered to ban umbrella companies across-the-board. The sector is worth in excess of £2.5bn in annual tax and NI contribution. Rather than a blanket ban, we need initiatives that promote compliance. Banning umbrella companies is not the answer.”
In practical terms, there will be several hundred thousand contractors who are not in the position to, or lack the commercial awareness/inclination to operate as limited company.
If you are an umbrella company, contractor or will be indirectly affected by the plans in the labour manifesto, get in touch with us at Simply Factoring Brokers as we would like to hear your views and possibly publish them in a subsequent piece here or in another publication.