The chancellors budget 2015 claims subsistence and relief for travel are to be restricted for Umbrella and Personal Service Company contractors should your end-user supervise, control and direct them.
Osborne confirmed in his Budget 2015 speech, “We will stop employment intermediaries exploiting the tax system”. These measures taking effect as of April 2016 will ensure that tax relief for home-to-work expenses will be unavailable for contractors.
The chancellor continued that he would be, “clamping down on agencies and umbrella companies who abuse tax reliefs on travel and subsistence” (Travel and subsistence often referred to simply as ‘T & S’).
The Different Wordings Behind Budget 2015
The budgets wording of “supervision, direction and control” is different to the terms used in the Autumn Statement late last year under the false self-employment laws. The false self-employment laws refer to those who stipulate ‘supervision, direction or control”. However, financial experts agree that whether this small change has any weight will yet need to be seen.
During the summer, the government will look at ways to effectively police the entire system.
The chancellor also stated that those who are genuinely ‘self-employed’ will not be subjected to the new methods of removing tax relief on travel and subsistence. How this happens isn’t yet crystal clear but however it goes about, it certainly won’t be simple or easy.
Documents seen by fellow contractor accountants makes it clear that the current proposal “will remove workers entitlement” to claim tax relief for T and S from home to work if the worker is subject (even if only broadly) to direction and control by the third party in question or if the worker is ‘supplied by an intermediary to a third party’ (including umbrella companies and PSC’s).
How all these attributes will play out is yet to be seen, however the split in opinion comes down to the ideal that someone who broadly looks like an employee will not be entitled to relief, yet an individual who does look like a self-employed worker can continue to claim relief.