It is now hoped that the FCSA calculator, used by all members of the trade association and which is more robust and accurate then any published before, will help eradicate unscrupulous service providers in the contractor industry by making it difficult for them to substantiate unrealistic claims as to how much take home pay contractors can benefit from under each provider’s scheme.

The FSCA approved calculation does not rely on inflated expenses assumptions to make the take home pay amount more attractive, and includes both net and gross administration fees so contractors know exactly what they are paying for the service up front; making it more difficult for service providers to entice new contractors in with misleading headline rates.

Rob Crossland, chief executive of Parasol, said: “Too often in this industry we are hearing of contractors who have had the wool pulled over their eyes about how much pay they can expect working via an umbrella or how much is being deducted by the umbrella for the service. We believe that the added transparency the FCSA calculator offers will make a significant contribution to remove such practices by poorly structured, poorly managed umbrella service providers.

“Claims such as ‘take home 90 per cent of your income,’ which is the type of claim a number of service providers at the bottom end of the market typically make to lure contractors in, damage the reputation of the industry as a whole and leave a trail of disgruntled contractors who have signed up for something they are highly unlikely to receive. A correctly structured umbrella knows that this claim cannot be substantiated.”

The final illustration provided by the FCSA calculator offers a full breakdown of contractor pay including tax and NI contributions, exactly as each contractor would find on their payslip, making it completely transparent.

Crossland concludes: “The launch of the calculator on our website follows on from the FCSA’s code of conduct launch and we are extremely proud to be one of the first service providers to successfully undergo the stringent audit process. The onus is now on the entire industry as a whole to stand up and demonstrate the most transparent and compliant practices in order to weed out the cowboy service providers that can tarnish the image of us all.

“Contractors should now ask if the illustration they are being given when calculating take home pay is FCSA approved. If not, ask why not.”

The new FCSA calculator can be accessed by visiting www.parasolgroup.co.uk/calculators/take-home-pay-calculator/.

Crossland commented: “For contractors, particularly those operating via an umbrella company such as Parasol, there are a lot of positives to take from today’s budget and what seems to be a pro small business stance taken by the Chancellor.

“The increase to the income tax threshold, coupled with the rise of £21 per week to the employers National Insurance threshold, which we pass on to our contractors,  will see them with more take home pay in their pockets.

“I’d also encourage contractors to make additional investment in their pensions in order to take advantage of the additional tax relief on offer and, with an increase in the cost of personal expenditure as a result of the increase in VAT to 20 per cent , make sure that they are claiming all the expenses they are entitled to.

“Overall, the budget's focus on lower spending versus tax increases could be a boost for UK contractors, with the caveat that the cuts to public sector funding has the potential to affect the number of new contracts out there. However, positive growth in the private sector has the potential to compensate for this.”

He said: “We believe that the priority for any review of IR35 needs to be about certainty. As the legislation stands IR35 is subjective, and as a result, different views by different parties can be reached using the same set of facts.

“IT contractors are a savvy bunch and will be well aware of the impact the huge budget deficit has on the UK economy and how the new Government will need to cut costs and generate additional tax income to address it. If the legislation was clear and could provide a series of specific tests that then produced a balanced answer then taxpayers, advisors and HMRC would save a lot of time, admin and expense.”

Despite IR35 becoming something of a political football during the recent election campaign, with both the Tories and Lib Dems using it to engage with contractors, perhaps more significant for contractors and freelance workers in the UK have been the results of two high profile cases heard in the High Court.

The impact the well publicised Larkstar Data and Dragonfly Consulting cases will have on how HMRC inspectors determine IR35 status remains to be seen. However, the fact that HMRC has updated its Employment Status Manual to include case law from both these ‘victories’ in the High Court clearly demonstrates that, despite the relatively miniscule tax yield, HMRC believes that IR35 is not just about the money and will go the distance in order to protect the legislation.

Rob Crossland added: “HMRC has now won all four of the IR35 cases heard in the High Court, as well as ten out of 15 cases brought before The Special Commissioners, not a bad record at all, and a clear sign that in the eyes of Government and the law, IR35 is working.

“What this means for contractors is that if they do not take reasonable care to ensure their IR35 status is fully examined and referenced against case law, should they be caught in HMRC’s ever expanding net, the outcome is likely to be a hefty tax bill and this is unlikely to change whatever form a simplified IR35 may take.

“It also means that taking proper advice from a specialist contractor accountant when it comes to IR35 should remain an imperative for any contractor thinking of operating as a limited company.”

Thinking of going Ltd?  Our sister company ClearSky Accounting are specialist contractor accountants.  For a fixed monthly fee a dedicated personal accountant will help you manage and run your Limited Company, meaning you could take home more money without the added hassle.   If you would like to find out more call them today on 08000 325 326 or get in touch online.

In a period of time that has seen fundamental changes forced on contractors and the way they manage their businesses, Parasol has consistently offered the highest levels of service, handling over 173,300 contracts, processing over 1.2 million timesheets, and completing over 860,000 payrolls for the UK flexible workforce, with 98 per cent of the money that comes in to Parasol paid out the same day.

The Parasol family now also includes ClearSky Accounting, acquired in December 2008 in order to provide specialist, ‘no-nonsense’ accountancy services for contractors and freelance professionals wanting to operate their own limited company.

Commenting on the anniversary, Rob Crossland, founder and chief executive of Parasol, said: “As a former IT contractor myself, I felt we had a good understanding of the industry’s needs when we launched the business and the success of Parasol during the last ten years backs this up.

“The industry itself has seen some highly significant and far-reaching changes during the last decade, including the introduction of IR35 and the changes to MSC legislation, and we have worked hard to help contractors navigate through them. However, our aim has remained constant, to be the UK’s favourite umbrella company by offering the highest levels of service and compliance.

“The next decade will be just as challenging as the Agency Workers Directive comes into effect, the impact of which remains largely to be seen. We also have a potential change of government, which could also impact on the professional contractor sector. Finally, the Freelancer & Contractor Service Association, of which we are a founding member, has begun to mature as an organisation and will continue to lobby on behalf of the industry and contractors, as well as work towards transparent and robust self-regulation.

“We believe that the flexible workforce in the UK makes an invaluable contribution to the UK economy and needs to be recognised accordingly. We are now looking forward to the next ten years, working with contractors in a wide range of industries and helping them to operate in a compliant, tax efficient way, giving them the peace of mind to focus on their latest contract and doing what they do best.”

The Parasol team is extremely proud of the large number of business awards and accolades it has achieved in recent years including the APSCo Staffing and Service Provider of the Year Award in 2005 and 2007 as well as regularly featuring in the Sunday Times Top Track 250, Sunday Times Fast Track 100 and the Sunday Times Best Companies Award.

Rob concluded: “The acquisition of ClearSky Accounting demonstrates our commitment to the UK contracting industry and we will continue to look for more opportunities to extend the Parasol family. The purchase was the first of several planned strategic acquisitions and part of Parasol’s ambition to become one of the biggest and best contractor service providers in Europe. We want to be seen as the ‘one stop shop’ where all a contractor’s career requirements will be met from first job to retirement.”

Rob Crossland, chief executive of Parasol, the UK’s favourite umbrella, responds:

“It is possible that public sector cuts could affect the Recruitment industry as a whole but in general, Contracting is anti-cyclical and the steady uptake in the private sector could counter balance any public sector fall.

“If an umbrella company has a critical exposure on public sector contractors via, say, a specific Agency then there could be issues.

“I think it is also important to mention that the definition of a public sector contractor is also relevant. There is a marked difference between an agency nurse (for example) and an IT contractor being used on an NHS project. In that example, and there are many, there is a key difference about where the impact will be most felt.

“I predict a stable year for the professional umbrella company despite continued land grab strategies (free offers and high incentives to join) at the other end of the market.”

In line with the rebrand activity and the Association’s ongoing commitment to transparency, our industry leading code of conduct is being made publicly available for the first time. The code of conduct encompasses the broad range of businesses that operate in the service providers sector, including umbrella organisations and businesses providing support services to limited companies. It outlines the professional standards that we believe should apply to the sector and is designed to encourage best practice across the industry. The code will be available on application and open to view via the Association’s new look website – www.fcsa.org.uk- from today.

FCSA’s Chairman, Stuart Davis comments:

The rebrand and release of the code are vitally important steps forward for the Association, demonstrating our committment to remove confusion in this complex and vibrant sector, as well as our ongoing growth and development. All of the FCSA‘s work is designed to benefit  our members, their customers and the industry as a whole, which is why we decided to take the unique step of making the code of conduct publicly available.

As part of the code of conduct process Association members undergo an independent review from one of the 'big four' accountancy firms. This, combined with HMRC’s receipt of the documentation, constitutes a unique combination of rigorous independent assessment and business transparency which clearly demonstrate our commitment to driving up professional standards across the industry. This approach proves that we do what we say, meaning we are able to use the code both to add value to our members and their customers and to hopefully inspire the industry at large.

Parasol has been a member of the Association since its launch in 2008, when we came together with other leading players in the industry to respond to a stream of proposed regulation which revealed a lack of understanding from Government as to how the flexible labour market operates. That year, SPA successfully engaged in the HM Treasury consultation process on the issue of subsistence and travel expense relief for freelance workers employed by umbrella companies. This was followed by the launch of the Association’s code of conduct in 2009. We look forward to keeping you up to date with further developments from the Association.

- ENDS-

If you have a taxable income of over £150,000, then there’s no doubt about it – your take-home pay will be affected by the new 50% tax rate for high earners which comes into effect on 6 April. For every £2 you earn over the magic £150k mark, the chancellor will claw back £1 in tax, which means less of your hard-earned money in your pocket.

On a high-earning short contract?

It’s also worth remembering that if you’re on a high-earning contract for a short period this tax year and it looks to the taxman that you’re going to hit the £150k threshold, then you’ll be taxed as such and will see your take-home pay drop. But, don’t worry, If you do over pay tax it will either come back to you in your payrolls if you continue as a Parasol contractor employee or you’ll get it back at the end of 2010/11 tax year.

How can you soften the blow?

A higher tax rate of 50% is going to hit those of you earning £150,000 or more on April 6^th whether we like it or not. But that doesn’t mean you have to sit there and do nothing!

Remember that you can significantly decrease the amount of tax you pay by making sure you claim all your expenses every month. And a Parasol pension can help save you up to 48% in tax and NI  - so that’s definitely a move worth considering. Of course, if you’re really concerned about being hit by the super tax, then perhaps it’s time to think about going down the Limited Company route. Our colleagues at our sister company, ClearSky Accounting will be able to do a take home pay comparison for you – just call us on 08000 325 326 or email enquiry@parasolgroup.co.uk and we’ll put you in touch with them. 

Parasol Pension - a super way to beat the super tax

With what is being called the new  ‘super tax’ about to hit high earning Parasol contractor employees, we thought it the perfect time to tell you about the benefits of a Parasol pension.  After all, why hand over even more of your hard-earned cash to Mr Darling when you can save for your future with Parasol and slash your tax bill by up to 48% at the very same time?

Click here to find out more or fill in an enquiry form today!

Rob Crossland Chief Executive of Parasol, has issued the following statement in response to yesterday's Budget announcement: "Rather than using the Budget to electioneer, the Chancellor's approach was very much 'steady as she goes' as he focused on ensuring the economy doesn't fall into a double dip recession as a result of any quick tax or spending cuts.

"We’ve kept both our Parasol and ClearSky contractors updated on what to expect from the Budget and as a result there were no real surprises yesterday.  Most of the upcoming tax increases have already been announced such as the introduction of the 50 per cent tax rate, restrictions of both personal allowances and of course for pension contributions.

"This will translate into both umbrella and limited company contractors paying more tax and of course, if they earn over £150,000, considerably more!  So it is crucial that they ensure their tax affairs are in order to maximise income as well to meet their tax obligations considering the Chancellor announced that he has his sights on anyone trying to evade tax through offshore structures. 

"A welcome addition to the Budget was the increase in entrepreneurs’ relief from £1 million to £2 million, this will encourage capital growth, and aligned to the capital gains tax remaining at 18 per cent, will produce a sizeable distinction between income and capital gains. 

"In summary, I believe this is a fairly balanced budget.  Will it help Gordon Brown win the election?  We’ll find out in the next few months!”

For a full budget review click here

http://www.clearskyaccounting.co.uk/blog/wp-content/uploads/2010/03/Spring_Budget_2010.pdf

Contractors are clearly unsure about the state of the economy. While 42.8 per cent feel more optimistic about the financial climate than they did 18 months, a further 42.8 per cent are less confident in it. Although attitudes surrounding the health of the economy are mixed, one sentiment shared by the majority (40 per cent) of respondents is that the country’s finances will take another dip before the “green shoots” really start to blossom.

Despite a grey cloud hanging over the economy, there are varied reactions from contractors and freelancers as to whether or not politicians will be able to help the country recover. While 35.7 per cent think the Conservative party are the best bet to help the UK out of the recession, 11.4 per cent would go with Labour, and 8.5% are most confident with the Lib Dems. However, the majority (37.1 per cent) of respondents don’t think any of the political parties will be able to help us out.

Negative opinions about MPs don’t stop there. The overwhelming majority (65.7 per cent) of contractors think the Chancellor’s decision to increase National Insurance contributions is unfair. What’s more, a staggering 72.8 per cent  say they would be more likely to take matters into their own hands and do their own legwork in finding the right pension and financial advice if changes to legislation meant they had to pay an Independent Financial Advisor for such information. It appears contractors and freelancers feel passionately about these issues – especially as 68.5% of respondents believe that contractors and freelancers are essential in pulling the economy out of the recession.

Rob Crossland, MD of Parasol, says: “Freelancers and contractors are vital to our economy and hold the key to helping us out of the economic downturn. The government should be doing more to support this invaluable group of workers, yet our survey clearly shows people don’t have much faith in their ability to help them, or the country. As a result, many are now looking at ways to take matters into their own hands – they simply cannot afford to wait for MPs to give them a lifeline.”

Speed of payment is clearly a key priority for freelancers and contractors, with 90.7 per cent of respondents stating they are happy with the speed their cash gets to them. Claiming back expenses is also a source of satisfaction among the company’s customers, as almost two-thirds say it’s really easy to claim expenses on My Parasol, and do so regularly.

The customer research reveals that clear communication is still vital in business – and an area where customers claim Parasol excels in. Some 83 per cent of respondents think the quality of Parasol’s customer service calls is “outstanding” or “really good”. Inspecting these positive figures more closely, over 85 per cent of contractors and freelancers “agree” or “strongly agree” that their queries are handled quickly and over 88 per cent believe the Parasol team is always knowledgeable. Customer service staff at the PAYE umbrella company were also commended for their friendliness, ability to listen, enthusiasm and patience.

Rob Crossland, MD of Parasol, says: “We’re delighted our freelancers and contractors are so happy with our services. At Parasol, we aim to make our customers’ working lives as stress-free as possible by taking care of their paperwork to ensure all their taxes and invoices are in order. The fact that over 90 per cent of respondents said they would recommend us to others as the UK’s best umbrella company – a thumbs up from a happy customer is one of the best rewards we could get.”

Parasol’s new brand identity won gold for copy style and tone of voice. The firm overcame stiff competition in the category of best corporate rebrand to reflect changed positioning, beating insurer Aviva to the silver award, and trailing closely behind consumer favourite Citroën. In the financial sector category, Parasol secured a third gong, securing a silver accolade alongside the global might of accountants Grant Thornton.

This triple-win follows recent Parasol’s accession to The Sunday Times’ Buyout Track 100 leaderboard, where it ranked the North West’s number one fastest-growing privately funded firm. Parasol shares its rebrand success with Manchester digital and brand agency, Studio North.

Parasol’s head of marketing, Susie Lee-Kilgariff, commented:  “I am so proud that all the hard work and effort of Parasol’s marketing team and Studio North has been recognised at such a prestigious event. To be nominated alongside such huge brands with multi-million pound budgets just goes to show the outstanding creativity you can find in the North West.”

The brand review involved a new corporate identity and logo, plus a more creative and interactive website designed to make freelancer support more engaging and accessible.

It would seem that Parasol is not only the UK’s favourite PAYE umbrella company, but this Warrington-based business also has the fastest-growing profits of any equity-backed company in the Northwest.  Ranked number one in the North West region on the Sunday Times Deloitte Buyout Track 100, Parasol also stormed into 14^th place in the nationwide ranking on this prestigious league table.

Parasol’s annual profits grew 87.26 per cent over two years, and it latest profit stands at just short of £3.6 million. The company was considered to have made an excellent contribution to the local economy despite of the downturn.

Parasol Group chief executive, Rob Crossland, commented: “This is great news for Parasol.  The rebranding of our core business and the acquisition have been very well received, and we’ve very much kept our focus on service – 98 per cent of the money that comes into Parasol is paid out the very same day.

It’s especially pleasing to be ranked top in the North West, particularly as we’ve been busy delivering tailored projects to help mitigate risks for agencies and clients in the region.

Looking to the future, our industry as a whole is facing huge challenges in the shape of the Agency Workers Directive (AWD), but we’re planning to build on our strengths and focus on promoting the professionalism of our sector through the Service Providers Association (SPA) – we’re very much here for the long term”.

As you’ve probably heard, it’s a new law the Government is bringing in to help protect so-called ‘vulnerable’ temps and contractors. Basically any temporary worker employed longer than 12 weeks will automatically be given the same employment rights as permanent staff - equal pay, holiday pay, sick leave and the like. And as umbrella companies like Parasol have been specifically mentioned for inclusion, it will directly affect our employees. End clients may very well be put off employing contractors for periods of longer than three months due to all the extra admin, paperwork and perceived hassle involved.

Of course, we’re all for protecting the vulnerable, but as our MD, Rob Crossland, points out, “The Government has missed a massive point here - vulnerable agency workers, who fully deserve protection, are very much in the minority. There is a massive amount of workers, many of them very highly skilled, who choose agency work because it suits their lifestyle.” He also states, “The really ironic thing for umbrella contractors is that much of what AWD tries to do (equal rights with permanent employees) is already provided by businesses like Parasol.” 

So, why has the AWD been postponed?

The reason behind Lord Peter Mandleson’s announcement to delay the AWD until October 2011 is to help the country emerge out of the recession. For Parasol, and the rest of the umbrella industry, this decision has been met with a massive sigh of relief as it gives us a bit of security about the very near future.

What does this mean?

It means our contractors don’t need to panic because Parasol is on the case! Rob’s worries about the AWD were that the Government were trying to rush it through before the next election in April without properly thinking through its impact on our industry. Now that we’ve got some breathing space, it means contractors can carry on operating through an umbrella for at least two more years.

What’s the future of the industry?

This new law means that there will be a positive reshaping of the contracting industry in the run up to 2011. And, you can be confident that Rob and his team here at Parasol are already planning how we will revise our service model to deliver the very best solutions for our hard-working, loyal contractors. Rob says, “Contractors with contracts lasting less than the 12-week qualifying period can continue to use an umbrella solution.  And there is sufficient time for alternative trading options outside of the AWD to make it onto the market before October 2011.”

What are contractors’ long-term options?

Setting up a Limited company may be the long-term solution to the AWD for some contractors, but there’s no immediate rush to go down that route just yet if you weren’t planning to.For those of our employees who don’t want that particular hassle, then rest assured that we’ll come up with a legal and compliant solution well before the October 2011 deadline to allow you to do just that. Watch this space!  

What if I want to go Ltd now?

If this is an option that already appeals to you then, yes, this is something worth looking into. And the great thing is Parasol’s sister company ClearSky Accounting is fully set up to help you. A no-nonsense accounting service, with over twelve years experience in all things Ltd, they will be more than happy to talk things through with you.

We’ll continue lobbying …

Finally, as the debate continues, we would just like to reassure you that Rob and the team at Parasol will continue to lobby Government to make sure that when the law does come in, it’s fair. Rob is disappointed that despite the clear evidence provided by many contractor organisations in the first consultation, the distinctions between professional contractor and vulnerable agency worker haven’t been acknowledged.” I still urge everyone to lobby Government,’ says Rob. “We need to push the point around understanding the labour market in the 21^st century. As without continued focus everyone will be classed as ‘vulnerable’…”

North West firm Parasol – the UK’s favourite umbrella company and one of the country’s fastest growing businesses, was recently recognised in two different categories in the global creative awards - the Daveys.

With more than 4,000 entries from across the world, the Davey Awards honour the finest creative work from the best small firms, agencies and companies globally. Parasol’s website won two silver awards in the financial and professional services categories.

Susie Lee-Kilgariff, marketing manager, Parasol said:  "We’re excited to have been recognised by such an accredited institution, alongside many other innovative campaigns. We wanted to create a website that would set Parasol apart from the competition and add an element of fun and imagination into what can be a dry and process-driven industry. We think we’ve achieved that and are really pleased it’s been acknowledged.”

Parasol, the UK’s favourite PAYE umbrella company and one of the country’s fastest growing businesses, today announced itself as a founder member of the Service Providers Association (SPA), a new self-regulating body designed to encourage best practice across the service providers sector. The SPA will issue guidelines, which will cover businesses that provide employment, payroll, tax, accountancy, administrative support and advice to the professional freelance workforce.