Flexible workers operating through PAYE will also benefit from the National Insurance tax cut, but many don’t realise they’re entitled to it.
Following the recent reduction in employee National Insurance contributions introduced on January 6, experts are urging temporary workers in the UK to check their payslips to ensure they are benefitting from this tax cut worth, in some cases, £450 a year.
This month’s cut to employee National Insurance – from 12 percent down to 10 percent – applies to employed workers earning more than £12,570 a year.
According to the Government, this reduction could save the average two-income household nearly £1,000 annually.
But also set to benefit from this move are many of the UK’s 1.6 million-strong army of temps, including umbrella workers, zero-hour contract workers and those engaged through employment agencies.
The majority of these individuals operate under contracts of employment despite being temporary workers.
Historically, experts said this has often resulted in confusion among temporary workers, who aren’t always sure what they are legally entitled to.
Julia Kermode, CEO of umbrella company compliance specialist, PayePass said: “The fact that most temporary workers will also benefit from this welcome tax cut has flown under the radar to a degree.
“This boils down to long-standing confusion among temporary workers – and often their employers – about their employment status and, in turn, the rights and benefits they receive.
“Added to this, in the umbrella industry, many tax avoidance schemes disguise themselves as compliant umbrella companies.
“On the face of it, they seem like a genuine umbrella company, but when you dig beneath the surface and scrutinise the payslip issued, they’re a tax avoidance scheme.
“This poses a massive risk to workers, who could be left with an eye-watering future tax bill from HMRC.
“In fact, along with checking to make sure that you’re benefiting from this tax cut immediately, whether your payslip reflects this change could also signal if you’re operating through a tax avoidance scheme.
“If you aren’t paying less National Insurance but your gross pay rate has stayed the same, then you have questions to ask.”
