Research from a collaboration of trade and professional bodies revealed that only 35% of UK hirers are familiar with the pending Travel & Subsistence (T&S) regulations with 38% of operational teams claiming to be fully up to speed compared to only 14% of HR respondents.

The research was conducted over the last two months by the FCSA (Freelancer and Contractor Services), CIPD (Chartered Institute of Personnel and Development), CBI (Confederation of British Industry) and REC (Recruitment and Employment Confederation) which sought to gauge the levels of awareness of the new tax legislation amongst end hirers, how they would respond and how the new rules would impact their hiring decisions when the new regulations come into effect in April. In total, 470 hirers responded to the research across all sectors and disciplines.

“It is clear that, whilst the UK government believes in the principle of hirers paying ‘a wage sufficient to attract workers without any special tax subsidy being necessary’, UK plc does not currently have the bandwidth to absorb the significant cost implications of this legislative ruling,” Julia Kermode, CEO of The Freelancer & Contractor Services Association, said.

 Other key findings revealed that 92% of organisations that hire freelancers and contractors will not be compensating all workers for their financial loss that changes to Travel & Subsistence (T&S) tax offset rules will present.  This comes despite the Government suggesting that it expects businesses to pay a wage sufficient to attract workers without any special tax subsidy being necessary.

Moreover, 79% of end hirers who plan to keep rates static believe that their decision will have a negative impact on workforce flexibility (79%), competitiveness (80%) and their ability to attract and retain staff (86%).

 In essence, the research revealed that 95% of hirers engaging umbrella employees and PSCs, all or some of these individuals will be impacted. For the 71% of end-hirers who have already determined which roles will be subject to supervision, direction or control (SDC), thereby removing the potential for those workers to offset T&S expenses against tax, more than a quarter (27%) know that this will be the case and three in ten (29%) believe it will be the case for most people. Just 5% think that all workers fall outside SDC, leaving 39% truly determining the nature of the working relationship on a case-by-case basis

With less than two months to go before the legislation takes effect, one third of respondents are yet to determine what they will do for their umbrella and PSC workers. Those who understand what the T&S rules mean believe that the legislation will reduce their organisations’ flexibility significantly and will also reduce the quality of available contractors to call upon. Fourteen percent of hirers said that they will use fewer umbrella employees/PSCs as a result of the changes.

“As individuals will be impacted in 95% of UK workplaces that use umbrella employees and/or PSCs, the findings of this research should give employers and government alike notable cause for concern”, Kermode said.

The FCSA plans to report their findings to the UK Financial Secretary to the Treasury.