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Temporary Workers & Contractors News - Changes to Law April 2016

26 Feb 2016

The end of Tax & NI relief for Travel & Subsistence expenses.

Temporary workers and contractors often have to travel varying distances between assignments and the costs and tax relief associated with this have been legitimately claimed by their Intermediaries; such as a Personal Service (PSC) or Umbrella Company. The Autumn Statement has confirmed that HMRC will remove the Travel & Subsistence (T&S) relief for workers who provide their services through Intermediaries and who are likely to fail the supervision, direction and control (SDC) test. This means that the main benefit of the current umbrella solution, for those who fail this test, will be removed.

Those who provide their services via a PSC that is outside IR35 will not be affected.

This change will take effect from 6th April 2016 therefore, if you expect to be affected by this change, you need to consider your options now.

Here’s a link to the draft regulations together with guidance notes and some examples of SDC.

https://www.gov.uk/government/publications/income-tax-employment-intermediaries-and-relief-for-travel-and-subsistence

Your status

  • Your assignment is subject to SDC
  • Your assignment is not subject to SDC
  • It’s unclear whether your assignment is subject to SDC

You need to consider which of these options apply to your current assignment and contact your umbrella company as soon as possible to discuss the options that are available to you.

Umbrella Companies are already announcing the launch of new schemes and solutions, however you’ll have to be careful to consider the risks associated with these as they will certainly be closely monitored and could be challenged by HMRC.

What to do next

Please talk to your Umbrella Company to find out your options if you are unsure of what to do following these changes in the law. Make sure you are prepared.

PS. No changes were announced about IR35.

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