New Changes

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The umbrella model as we currently know it was already time-tabled to end on 6th April 2016, and that was the case even before the initial consultation on the T&S restrictions began back in 2015. The reason for this is that Finance Act 2015 (which came into effect at the beginning of this current tax year, last April), contained restrictions which effectively ban ANY AND ALL expenses being offset through PAYE on an ongoing basis from April this year, if the payment model in question qualifies as a ‘salary sacrifice scheme’ (see sub-section 5b of section 289A of the Act). And umbrellas, as we currently know them, ARE salary sacrifice schemes, so that effectively means that from April 2016 the current umbrella model reverts to a simple outsourced PAYE model, with no expenses at all being able to be offset on an ongoing basis to reduce the workers weekly or monthly tax bill.