Contractors Articles

The government has published its Finance Bill, confirming a number of important amendments from the Budget and Autumn Statement.

It contains a number of important details about travel and subsistence (T&S) tax relief for contractors engaged through an employment intermediary, like an umbrella company.

Travel and subsistence

Clause 14 of the bill refers to ‘travel expenses of workers providing services through intermediaries’, detailing important changes to T&S tax relief for contractors engaged through umbrella companies.

The document includes a number of amendments, but none that were unexpected.

In the past, contractors working through umbrella companies have been able to offset ‘reasonable’ expenses like travel and accommodation against their tax bill to increase their take home pay.

The new Finance bill confirms a number of restrictions to this, particularly regarding how the new rules will be applied. 

George Osborne has warned that the health of the UK economy is at risk from shaky global conditions, saying 2016 has opened with a “dangerous cocktail of new threats”.
Speaking in Wales, the Chancellor cautioned that, far from being ‘mission accomplished,’ 2016 will be ‘mission critical’ for Britain.

The confusion that was surrounding the wording in the Autumn Statement documents regarding restrictions to be imposed on tax relief for Contractor Travel and Subsistence claims has now been clarified by HMRC.

The initial confusion was compounded by the fact that George Osborne made no mention of any proposed changes during his speech. 

Once the dust has settled and the analysis over and done with, the Autumn Statement delivered by Chancellor George Osborne yesterday may well be looked back on as positive for business.

With the economy in good shape, and the Chancellor all too aware that he will be challenging a party leadership contest in the not too distant future, it looks as though he is trying to shirk the unpopular public image of ‘George the Cutter’.

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.

However, other commentators in the industry interpret the statement made to be that restrictions will apply to umbrella company workers and PSC’s caught by IR35 and that potentially there may be a Supervision, Direction and Control type test to see if a worker is entitled i.e. that they are truly self-employed.