With the Spring Budget on 6 March, speculation is rife on what package of measures Jeremy Hunt will announce in the run up to an election.

Whilst tax cuts are mooted to take centre stage, Paul Newsham, CEO of the Payroll Compliance Authority (PCA), considers what the Budget could yield for those working in, with, or on behalf of the outsourced payroll sector.

Newsham, who is a Chartered Accountant with more than 30 years of experience, says:

"It's been six months since the government closed its consultation on options for regulating umbrella companies and tackling non-compliance. Given that it took 16 months before results were published from the previous call for evidence on this market, I would not expect fully fledged proposals or plans for regulation of the sector to be announced in the Spring Budget.

"The issues that regulation needs to address are extremely complex. Even the definition of an umbrella company is not straightforward, and for there to be legal parameters around regulation the difference between a compliant and non-compliant provider first needs to be clearly defined. If regulation does not get it right, it would be a wasted, frustrating, and costly exercise."

Two years ago, in February 2022, the government closed a call for evidence on the umbrella company market. The summary of responses was published in June 2023 alongside a new consultation looking at policy options for regulating umbrella companies and tackling non-compliance, which ran for 12 weeks, from 6 June until 29 August 2023.

Newsham continues: "Nonetheless, we are in the run up to an election, which means anything could happen. If the current government deems that supporting our contingent workforce, recruitment agencies and legitimate umbrella companies is a potential vote-winner, there is a chance that some form of regulation, or at least positive steps in this direction, could be fast-tracked, or an outline proposed.

"What is more likely is the announcement of broader steps to cut down on tax evasion or other measures to appease the sector. For example, further proposals building on the imminent new enforcement powers of Companies House to verify and remove information from its register and share it with law enforcement agencies, or further clarifications or simplifications around the IR35 off-payroll working rules. No doubt, there will be mention of the legislative fix for double taxation coming into effect in April, listed among positive steps."