HMRC have published a new tax Spotlight: ‘Umbrella companies offering to increase your take-home pay’. It highlights the fact that many employees and self-employed contractors are failing to realise that some staff agencies and umbrella companies are flouting tax anti-abuse rules.

HMRC say 'companies are promising that you can keep 80, 90 or 95% of your wages and be tax compliant (this is unlikely to be true as, in most cases, the basic rate of Income Tax is 20% and National Insurance Contributions (NICs) are also due on earnings). Key features are that:

These companies may tell you they are compliant with tax rules but you shouldn’t rely on this.

If you want to speak to someone about getting out of avoidance you should email: This email address is being protected from spambots. You need JavaScript enabled to view it..

If you are aware of these types of arrangements operating you can report them to HMRC.

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HMRC Spotlight 45