As disclosed in the Chancellor’s Autumn Statement, the Government have drafted legislation changes that will see workers employed through umbrella companies no longer being eligible for tax relief (Income Tax and Employee National Insurance) on reimbursement of their travel and subsistence expenses.

The change is expected to affect up to 430,000 umbrella company workers.

Relief will be restricted where services are supplied under the supervision, direction or control of another person.

With the ink barely dry on the Autumn Statement, chancellor George Osborne has announced that his 2016 Budget will take place in less than four months’ time on the 16^th of March.

Importantly, this date is just before the new April tax year, which opens up the possibility that the Chancellor could enact some last minute tax changes that could be disadvantageous to contractors. 

Umbrella contractors, like those employed by Umbrella.co.uk, had a number of reasons to smile yesterday as the Chancellor George Osborne delivered his Autumn Statement address to the House of Commons.

Following months of speculation about the impact of tax changes for contractors, the statement was relatively mild compared to some of the expectations in the contractor community.

The biggest relief for contractors employed by umbrella companies is that on first reading it appears that they will still be able to claim tax relief on their Travel and Subsistence expenses.

Our interpretation of the restriction on Travel & Subsistence expenses is that it will only apply to contractors working through their own limited company that are caught by IR35 legislation.

We have scoured the document in-house at Umbrella.co.uk and can only find the below statement that relates to contractors and travel and subsistence.

“Employment intermediaries and tax relief for travel and subsistence – As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.”

https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents/spending-review-and-autumn-statement-2015