Labour denies crackdown on umbrella companies

Monday 29 September 2014

The Labour party has denied rumours that it intends to take action against umbrella companies.

It was reported earlier this week that party leader Ed Miliband said he intends to prevent companies from using umbrella companies to exploit expense rules and avoid tax and national insurance contributions.

However, when the Labour party was approached about this, it brushed off the rumour as speculation. Although it did say Mr Miliband has omitted several parts of his speech in question at the party's annual conference through error.

Initially, the Labour party reported that if it were to be voted in during the next general election it is planning to cut travel and subsistence tax relief that umbrella company contractors are entitled to.

This came out ahead of the party's annual conference, although in the actual event Mr Miliband did not make any reference to umbrella companies.

Nevertheless, it was reported in the media that Labour is planning a clampdown as a means of tackling tax avoidance.

Mr Miliband did say during his speech that a crackdown on tax avoidance would be used to generate revenue to fund the NHS.

He said that £2.5 billion would be used to boost the NHS, of which £1.2 billion would be gathered through a new mansion tax on homes worth over £2 million, £150 million would come from a levy on tobacco companies and £1.1 billion would be gained through the crackdown on tax avoidance.

Mr Miliband explained that he intends to provide more support for self employed professionals, which could be good news for limited companies and sole traders.

He noted that these types of workers tend to struggle with gaining a mortgage or saving up for their pensions, which he intends to support them with.

The party leader referred to current rights among the self employed as 21st century discrimination and promised to help them gain equal rights.

Mr Miliband stated: "We need to talk about them more. Five million people, often the most entrepreneurial. ... they don't want special privileges, they just want a fair shot."

The five million figure mentioned was gained from recent figures from the Office for National Statistics, where it noted that 4.6 million people (15 per cent of workers) are self employed.

Mr Miliband also explained that, of these people in self employment, two out of three currently do not have a pension and one in five cannot get a mortgage.

This speech was welcomed by groups of freelancers and other types of self employed professionals, which had been calling on the Labour party to implement policy changes to aid these workers at its annual conference.

This call for Labour to include allowances for self employed professionals is one of many. A number of groups have asked for better working conditions and rights for these types of workers.

It has been requested that these workers get such benefits as maternity pay and help with saving for their pensions.

By Victoria McDonnell

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