Travel Expenses

Employment Intermediaries – Temporary Workers tax relief for Travel and Subsistence Expenses

17 December 2014

Yesterday 16th December 2014 HMRC issued their discussion document on changing the current scheme in respect of the tax relief temporary workers currently benefit from for costs reimbursed in relation to travel and subsistence (food and drink).

The full discussion document is available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/387335/Employment_Intermediaries_-_Temporary_workers___relief_for_travel_and_subsistence_expenses.pdf

In summary the discussion document is:

26 pages, 80 paragraphs.  Only 11 paragraphs deal with potential ways forward, the rest being explanation of the current situation.  The explanation makes it clear that Government feels there is an income deficit from the legislation currently in place covering the contractor market. However, it certainly does not come across as a policy document showing that any clear decisions have already been made and need to be justified.

Of the suggestions of potential ways forward (para 69 onwards), the first is to deem that workers employed under overarching employment contracts (OAC) have a permanent workplace.  This would leave the travel and subsistence rules in place but only relating to employees genuinely seconded away from their permanent (i.e. the client workplace).  They recognise that this change would also catch PSC contractors but, if they were excluded from the change, they acknowledge the risk that unsuitable contractors may be pushed towards PSC.

The other option is to keep the expenses rules in place but disallow anyone under an OAC from using them. This would not then affect PSCs.

There is also an acknowledgement that there is a lobby suggesting that all temporary contractors working via intermediaries or not should be able to claim tax relief.

Stakeholders are invited to contribute to the discussion by 10 Feb.

Umbrella will be submitting our response shortly.

As discussed in earlier news umbrella articles the proposals discussed above ignore the fact that contractors are genuinely working at a temporary workplace often many miles from their place of home. To treat them the same as permanent employees completely misses the lengths contractors have to go to, to deliver their service.

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