“The UK contingent worker sector is experiencing some of the most radical changes of its time. It is vital companies engaging contingent workers in the UK understand these change and do not fall foul of the new legislation, as it could become a costly mistake.
For many years there have been a number of acceptable structures for engaging contingent workers such as Limited Company, Sole Trader and Umbrella Company. Most of these structure allow the contract worker to offset genuine business expenses, travel and subsistence against their tax liability. From April 2016, contract workers engaged by an employment intermediary, who are working under or have the right to Supervision, Direction and Control from the end user, will not longer be able to claim tax relief on travel and subsistence. This could potentially impact the take home pay of a worker by 15-25% and ultimately will mean the cost of hiring a contract worker will increase across nearly all sectors. The introduction of debt transfer means misclassification of a worker, could result in unpaid tax liabilities being transferred to the employment intermediary or the end user.
We believe this is only the start of the changes ahead and that more than ever it is important to be aware of the implications of non-compliance”, as stated by Michelle Reilly, MD CXC Global EMEA.
With the growth of the contingent workforce on a global scale and the emergence of the gig economy, governments are finding it a challenge to keep regulation in alignment with innovation. The proposed changes to expenses have created a stir in the marketplace and would tend to inhibit, rather than support the new way of work.
In a recent Forbes article, it was quoted that in a Workforce 2020 study conducted by Oxford Economics and sponsored by SAP, 83% of surveyed executives indicated their increasing preference for contingent workers, regardless of economic factors.
We believe that businesses and governments around the world need to embrace the new economy and way of work and become more innovative around regulation.
CXC Global are providing a free webinar on Thursday, Feb 25, 2016 12:30 PM – 1:15 PM EST to discuss the proposed changes to contractor compliance in the EU and the impact it will have on contractors and businesses. Click here to read more and register.
