The changes to travel and subsistence expenses became effective from 6th April 2016. So major changes are hitting labour supply in the UK......

Addressing the House of Commons in his Budget Speech Chancellor George Osborne said: "We will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence – while we protect those genuinely self-employed.”

Important facts to know: 

The Government have removed tax relief on home-to-work travel and subsistence. The payment of any expenses involving salary sacrifice style arrangements will now be liable to PAYE and NIC.

Individuals working through employment intermediaries (umbrella providers) will not be allowed to claim tax relief on their T&S expenses, where the worker is under supervision, direction or control (SDC) in the manner in which they carry out the work.

Individuals that work through a personal service company will not be allowed to claim tax relief on their T&S expenses where the intermediaries legislation (IR35) applies, and they are not deemed as genuinely self-employed. 

What does Supervision, Direction and Control actually mean?

HMRC has produced some outlining typical examples and scenarios under the new expenses legislation to help contractors understand the new rules a little more. Under the SDC definitions, supervision is considered to apply to someone managing a person doing work to ensure it is being down to the specific standard, direction means someone make a person carry out their work in a certain way by providing instructions and control means someone dictating what work a person does.

The document also provides helpful examples and scenarios for different contractor types such as IT consultants, professional chefs and market researchers.

Company directors & business owners 
 
Company Directors and business owners need to be aware that they could receive a personal liability notice transferring their companies’ underpaid liabilities to them personally if compliance is not followed.

Help & advice

If you need any help or advice regarding the new legislation please contact our compliance team at our head office on 0116 2625225.