Almost half of UK contractors (48%) are using some form of personal service company (PSC) solution to manage their affairs, whether managed by themselves or by a third party, according to a recent survey by umbrella company, FPS Group and ContractJobs.com.

However, there are fears that legislation that could be brought in as early as April next year would effectively ban their use, particularly within the private sector. The government wants to ensure that ‘controlling persons’ engaged by private firms are treated like employees for tax and NI purposes by being put on the pay roll.

The private sector accounted for 54% of all completed interim assignments in Q1 of 2012, according to the Interim Management Association.

The government’s proposals contained in a consultation document have already divided opinion, while a tax partner at Deloitte has warned they could damage the relationship between agencies and their clients.

More than 52% of those surveyed plan to be payrolled using some form of PSC solution in their next role, with only 34% intending to use PAYE. However, if the government has its way these figures could well change. 

• See p12 of the September issue of Recruiter, out this week, for further examination of the potential repercussions of this proposed legislation. The article is also available online here.