Employment intermediaries Articles

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.

APSCo have enquired and received clarification from HMRC in respect of the confusion that surrounded the employment intermediary reporting requirements for agencies where an agency worker is working through an Umbrella Company.

They have also confirmed that payment information will not be required when this is the case.

The confusion arose because on the face it more than one category could apply when reporting where an agency worker has been paid not through an agency’s own PAYE scheme.

Umbrella Companies featured in Treasury Questions this week with 2 questions from Labour MP’s.

The questions appear to show a misunderstanding about how compliant umbrella companies operate.

A group representing umbrella companies and employment intermediaries held a lobbying event on 11th March at the Houses of Parliament which has hopefully gone some way to clarifying these inaccuracies for those MP’s that attended.

The timing of the Chancellor’s announcement regarding the review of Employment Intermediaries Tax Relief on Expenses was raised in Parliament yesterday during Business Questions.

All Umbrella Companies are Equal (AUCAE) have published their response to the HMRC Employment Intermediaries: Temporary workers – relief for travel and subsistence (food and drink) expenses. 

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. 

The Government has published the full budget 2015. A search for contractors, freelancers and umbrella companies highlights the following:

Umbrella companies and employment intermediaries

1.250 Autumn Statement 2014 announced that the government would review the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses, relief not generally available to other workers. This is unfair. As a result of the review, the government will change the rules to restrict travel and subsistence relief for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user. This will take effect from April 2016 following a consultation on the detail of the changes. It will level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not.

Today, 10th March 2015, representatives of the Umbrella Company industry and of Employment Intermediaries will be meeting a number of MP’s at the House of Commons to discuss the HMRC review of Tax Relief on Expenses.

The CBI (Confederation of British Business) who lobby on behalf of British businesses have responded to the HMRC discussion on Employment Intermediaries: Temporary Workers – Relief for Travel and Subsistence Expenses.

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.