Government accused of hypocrisy over councillor expenses

Government accused of hypocrisy over councillor expenses

2 November 2015

The Freelancer and Contractor Services Association (FCSA) has accused the government of valuing councillors over contractors, calling hypocrisy on government plans to provide travel-to-work tax relief to local councillors at the same time as talking of scrapping them for temporary workers.

At a time when the review into contractor travel and subsistence (T&S) tax-relief is ongoing, it has emerged that MPs want to award councillors a similar package of tax savings on their travel.

The government changes will exempt councillor travel expenses from income tax and National Insurance. This applies to journeys made between the councillor’s home and permanent workplace. 

Similar tax-relief measures could be withdrawn from contractors in April of next year.

The Treasury’s David Guake outlined the reasoning behind the proposal: “Changes in working practices mean that fewer councillors see constituents at home, so most are no longer eligible to relief for home-to-work journeys.

“The government does not think that is fair. We want to ensure that no one is discouraged from undertaking a role as a councillor due to the tax treatment of their travel expenses.”

Responding to the news, FCSA chief executive Julia Kermode said: “The damage that will ensue from removing T&S tax relief for the flexible workforce will be significantly greater than the benefit of introducing the same relief for councillors, which will be minimal and certainly not far-reaching.”

Scrapping the travel and subsistence tax-relief for contractors could certainly be a tough blow for some temporary workers.

Earlier this month an IPSE survey found that if the T&S expenses were scrapped, 17% of contractors would be concerned about their ability to take on new work and keep their businesses open.

The same survey also found that 85% of freelancers would have to pass on the extra costs to clients by increasing their prices.

Dave Wilton, Business Development Manager at Umbrella.co.uk said: “Travel and subsistence expenses provide a lifeline for contractors, who incur high costs travelling between faraway locations every week. Withdrawing this tax-relief would do untold damage to our contractors, and it would have some wider consequences for the labour market as a whole.

“Once again this move highlights the gulf between politicians and hard-working contractors. At a time when we’re all supposed to be 'in this together', it seems that some are still bearing more of the burden than others.”