The Low Incomes Tax Reform Group responds to HMRC Travel & Subsistence Review

16 February 2015

The Low Incomes Tax Reform Group (LITRG) have published their response to the HMRC Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses.

In the past the LITRG have reviewed Umbrella Company Schemes and in particular how alternative models such as the Payday by Payday Scheme (PDBPD) affect Low Income Workers. It is from this respect they have responded to the HMRC potential threat of restricting relief on travel and subsistence expenses. They are in particular concerned that any scheme that is deemed non-compliant could see the low income worker being chased for taxes owing.

We at Umbrella and the majority of other umbrella companies do not operate PDBPD Schemes.

The LITRG recognise that thought needs to be given to temporary workers who are unable to keep down their travel costs by moving close to their place of work. They also highlight their concern with the short time scale given for a response and the concern that it could lead to a hasty decision.

The LITR raise a concern that any change should not adversely affect mobile workers in the care industry.

They also raise the issue about Umbrella Companies that flout the National Minimum Wage Legislation and where Low Income Workers are not seen to benefit from being in an umbrella company type arrangement.  Again this is not true of the majority of umbrella companies. They go on to ask for simplicity so the low paid have an easier understanding of their tax position.

In the majority the LITRG response focuses on the PDBPD model so does not cover the umbrella company market as a whole. They do however highlight the fact that some temporary workers would not have taken long distance assignments if the relief was not available and that to continue such assignments higher rates of pay would be necessary but not always feasible. It could also result in the temporary worker entering new schemes where they are not employees and hence lose the statutory rights they currently benefit from. Some temporary workers could never be classed as having a “permanent place of employment” as they visit clients for example at their home i.e. meter readers, carers.

A good point made is that for low income workers where new legislation could mean they receive a higher wage in place of what they currently receive as expenses. An effect of this higher wage is it could result in them losing tax credits from which they currently benefit.

The full LITRG response is available at:
http://www.litrg.org.uk/Resources/LITRG/Documents/2015/02/150210_LITRG%20Response%20Temp%20workers%20and%20travel%20expenses_FINAL.pdf

LITRG were set-up as an initiative from the Chartered Institute of Taxation (CIOT).