As anticipated, Wednesday's Spring Budget did not include any announcement around regulation of umbrella companies. Unsurprisingly, the focus of the measures announced, and the financial claims made was to win over as much of the electorate as possible in the months before a General Election. Any Chancellor would have taken the same approach, although the overall impact is showing mixed results, particularly with the main headline-grabbing National Insurance cut being leaked ahead of the big day.

Nonetheless, at Payroll Compliance Authority (PCA) we take some reassurance from mentions of umbrella companies and cracking down on tax avoidance buried within the Budget papers.

Regarding tackling non-compliance in the umbrella company market, the government says it will set out next steps 'shortly', and that it is:

"..committed to protecting workers employed by umbrella companies, ensuring fair, genuine competition in the market and preventing significant Exchequer losses caused by tax non-compliance. The government will provide an update on the recent consultation on tackling non-compliance in the umbrella company market at Tax Administration and Maintenance Day."

The 2024 Tax Administration and Maintenance Day is scheduled for 18 April, suggesting the promised 'update' will indeed be soon. The papers also share that in summer 2024 the government plans to publish new guidance to support workers and other businesses who use umbrella companies.

We look forward to hearing what the announced update involves and whether we can expect full regulation, and in what timeframe, or what the next steps will be towards cleaning up the sector for the benefit of the contingent workforce, recruitment agencies and compliant umbrella companies.

Nonetheless, whatever is announced, there will undoubtedly be a big question mark hanging over the likelihood of anything being pushed forward or implemented before a General Election.

Regarding tax evasion in general, the government claims it will continue to 'clamp down on promoters of tax avoidance', with particular focus on 'bad actors' providing tax advice that could cause harm and mooting a stronger regulatory framework in the tax advice market.

Overall, in the Chancellor's Spring Budget, the announcement of a 2p reduction to National Insurance Contributions will have been welcomed by workers at an economically challenging time. Increasing the child benefit threshold from £50,000 to £60,000 also means that more families will be able to keep their child benefit as they balance work with childcare. The rate at which the High-Income Child Benefit Charge (HICBC) is charged will also be halved for individuals earning up to £80,000 to offer incentive to work.

Whether these, and other measures announced on 6 March, amount to a 'budget for long-term growth' remains to be seen.