Towards the backend of 2021, the government released several pieces of guidance about umbrella companies to help the supply chain and temporary workers remain compliant with HMRC’S rules and regulations. The government also launched a consultation that seeks assistance from those who have used umbrella companies in the past. It is almost certainly the government’s way of asking for help understanding the sector. With this in mind, will the government regulate umbrella companies in 2022? Here’s what we know so far.
The rise in demand for umbrella companies is continuing
Umbrella companies remain a very popular payroll service for temporary workers and staffing agencies in the UK. A report last year by the Low Incomes Tax Reform Group confirmed over 500 umbrella companies were operational, and we suspect this number will have grown since the report was published.
Does the government regulate umbrella companies at the moment?
The simple answer – no.
However, while there are no government regulations, there are two self-regulatory bodies that are worth paying attention to. These are the Freelancer and Contractor Services Association (FCSA) and Professional Passport. Both bodies are very well-respected and provide reputable accreditations for service providers – including umbrella companies and contractor accountants.
If you’re looking for an umbrella company that operates in accordance with UK law, we recommend you only consider using one that has an accreditation from the FCSA or Professional Passport.
Should umbrella companies be regulated by the government?
Providing umbrella company regulations are in the very best interests of temporary workers and ensure umbrella companies must be compliant – we are all in favour of the government rolling them out as soon as possible. Read our blog: Should Umbrella Companies Be Regulated?
Is the government likely to regulate umbrella companies in 2022?
It looks like the government will regulate the umbrella company sector, but we cannot be certain.
More stakeholders than ever before are challenging the government about umbrella companies and asking for regulations. The introduction of new guidance in 2021 was a sign that the government listened.
The following was released to help contractors, freelancers, temporary workers and members of the supply chain:
- Working through an umbrella company
- Check how to reduce your risk of using an umbrella company who operates a tax avoidance scheme
- Check your payslip if you work through an umbrella company
- Check if you are at risk of tax avoidance
As well as the above guidance, the government also launched a new consultation (Call for evidence: umbrella company market), and they would like your help. The consultation sets out dozens of questions that the government would like temporary workers and supply chain members to answer. It appears the government wants to better understand umbrella companies and how they work.
While we cannot be sure, the new umbrella company consultation suggests the government is considering regulating the umbrella company sector. Once the new consultation closes (Tuesday the 22nd February 2022), the information gathered is likely to be thoroughly reviewed and undoubtedly acted upon.
Stay up to date with the latest umbrella company news
Please keep visiting umbrellacompanies.org.uk for the latest news on the regulation of umbrella companies.
Top 10 umbrella companies
Are you looking for an umbrella company you can trust? To help make your search easier, we’ve collated a list of our top 10 umbrella companies. They are all accredited by either the FCSA or Professional Passport, and some have special offers at the moment. Please go and check them out now!
