Important Pre-Budget News
9th December 2009

Vehicles (Umbrellas) Exploiting National Minimum Wage Rules
In today’s pre-budget report it was announced:

5.94 The Government is committed to addressing the problem of the potentially exploitative arrangements implemented for some workers paid at or near the National Minimum Wage (NMW). These arrangements, which make use of the tax and NIC expenses rules, can adversely impact on NMW workers’ entitlement to earnings related social security benefits. HM Treasury, HMRC and the Department for Business, Innovation and Skills, will launch a consultation in the New Year inviting views on proposed changes to the NMW Regulations and whether this is the best approach to tackling this problem.

As anticipated by many, Umbrella companies receive yet another mention in the pre-budget report, it must be remembered the Government mentioned legislating against umbrellas previously and simply concluded to up the compliance on umbrella companies.  Whether legislative provisions come to fruition is yet to be seen and we will, like you, have to wait and see whether the consultation process goes ahead as planned and what the proposals may be.

What should come as a relief to most umbrella company providers is that these proposals will likely put out of business the more unscrupulous providers who do not operate the expenses rules or National Minimum Wage rules correctly.  This will mean those providers operating correctly, in line with the legislation, will now be placed back on an even playing field with competitive pricing.  Those who do not operate correctly, ignoring National Minimum Wage and “fudging” expenses, will have to up their compliance or simply fall by the wayside.

We will be keeping a close watch on developments over the coming months and keep you fully up to date on all the latest proposals.  One thing is for certain, Umbrellas need to get their house in order now to safeguard against future attack.

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