Union warns new policy changes preventing workers who are employed via umbrella companies from receiving tax relief on expenses will have a considerable impact…
Plans to ban workers employed via umbrella firms from receiving tax breaks have been heavily criticised.
Construction union UCATT said an Inland Revenue policy document published before Christmas had underestimated the impact of Chancellor George Osborne’s tax changes.
Currently, it is thought the average construction worker employed by an umbrella company will rack up around £144 a week in travel expenses. However, the changes mean these expenses will be taxed at 45 per cent. This is broken down by 20 per cent income tax, plus both employees and employers National Insurance Contributions. This means a loss of £64.80 per week or £3,369 per year.
HMRC was accused of failing to see the impact of the changes, which would leave nearly half a million workers around £360 a year worse off. However, UCATT warned the figure was likely to be higher and said “this is a gross underestimation of the financial impact on British workers.”
Despite this the document said the changes were “not expected to have any significant economic impact.”
UCATT National Secretary Brian Rye said: “The attitude of HMRC in belittling the impact this tax change will have on construction workers, working under the yolk of umbrella companies, illustrates the utter contempt this Tory government has for the British worker.
“£360 may be a dinner out for George Osborne but to the average construction worker that’s a major financial hit. In the real world, £3,369 less a year – will mean a lot less food on the table.”
“Almost half a million workers will be significantly worse off after April, when this measure is introduced. For those that have to travel to several sites for their work the hit will be massive.
“Meanwhile umbrella companies will be allowed to continue their tax dodging ways by this Tory Government.
“This Government is government by the rich, for the rich – and wants the rest of us pay. We’re damn sure George Osborne’s travel expenses aren’t taxed.”
The union has been campaigning for the abolition of umbrella firms.