Another week, another COVID-related budget update from the chancellor, Rishi Sunak.
And, as the sun is shining, the forecast is that umbrellas may not be needed. (Well. One kind, anyway). Umbrella companies are still definitely needed for all those contractors who would be financially worse off without them.
In his budget, Mr Sunak announced a £1000 job retention scheme policy which has been welcomed by contractors, umbrella companies and umbrella company workers.
The incentive is £1000 for every employee who is kept on the payroll until next year. Under an Umbrella structure, that could effectively mean a £1000 bonus, for keeping oneself on the payroll.
But if course, as has been evident these past months, there’s no such thing as a free lunch and not only that, there’s no point celebrating until we know for sure.
HMRC has promised full guidance by mid-July which should clarify if and how umbrella companies can take advantage of the cashback bonus. It does mean that employees need to be earning over the minimum limit and of course, it also depends on them being able to keep going until January – which for some umbrellas that are already struggling, could be a big ask. And of course, if you are only someone working for an umbrella, rather than the one in control of it, it is unlikely that you will see anything of the £1000 yourself.
Other good news is for those who use umbrellas to work in the hospitality, leisure and tourism industry, who are about to see a VAT cut to just 5% form July 15th. This cut also lasts until January 2021, so could be a double bubble of good news for umbrella workers in this sector, such as those who own small guesthouses or cafes and pay themselves through an umbrella.
And finally, there is some good news out there. One of the bugger umbrella companies has agreed to ensure that contractors NI and Pension contributions are covered by them right the way through to November. So, if you are in the market for a new umbrella, make sure you shop around (start with our handy callback form) and get one who is focused on looking after you through the good times and the bad.
