Budget 08: Government targets umbrella companies

Tens of thousands of contractors could be hit for tax on travel expenses after the government announced it was looking at the relief available to workers operating in umbrella companies.

Many temporary workers moved into umbrella company structures after the government effectively killed off managed service companies due to concerns over tax avoidance.

Anne Redston, visiting professor at Kings College London, said the 'writing is on the wall' for umbrella companies as the government announced in its Budget notes that it was considering action against the structures.