Umbrella Companies and Tax

24th November 2017

There’s a lot of chat among both drivers and haulage bosses about Umbrella Companies and tax.

Some companies are taking on drivers off the payroll to avoid paying tax and National Insurance, and some drivers are happy to do so, because they think it reduces their tax bill.

The RHA believes this is a bad thing – and so does HMRC.

In their eyes, unless the driver actually uses their own vehicle and has their own ‘O’ Licence they are not self-employed.

If you are telling them to drive your vehicle and when and when they are required to do deliveries they are – in HMRC eyes – employed. That means PAYE and NI should be applied to the money they earn.

When in doubt check out the very useful Status Tool Indicator on the HMRC website.

In this model, the Umbrella is the employer of the driver and responsible for PAYE and NI on their payments.

The tax advantages of doing this were more or less wiped out in April 2016 when it was ruled that if the driver receives “direct supervision or control” advantages on expenses are hit: some Umbrellas claim to be able to legally pay travel costs getting to and from work - that’s incorrect.

For more advice please call the RHA Helpdesk on 01274 863 100 (England & Wales) or 01506 414073 (Scotland & NI).