Travel and Subsistence Articles

Finance Bill amendment could result in some contractors having to repay expenses

http://team@umbrella.co.ukFortunately though, no Umbrella.co.uk contractors will have to repay any claims since April 2016.

Confusion about the wording of the Finance Bill 2016 resulted in some contractors claiming for Travel and Subsistence (T&S) expenses when they shouldn’t have. An amendment to the bill has now been applied retrospectively to April, meaning that anyone who claimed for expenses incorrectly will now have to repay the money. 

New travel and subsistence guidance released
marketing | 12 April 2016
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HMRC has released new guidance on the travel and subsistence (T&S) restrictions that came into force this month and who they will apply to.

Specifically, the new guidance tackles questions relating to the personal provision of services and supervision, direction and control.

We have summarised many of the points and picked out some of the more interesting paragraphs that could be of consequence to contractors. 

Changes to accommodation expenses rules coming in April 2016

Like other travel and subsistence reliefs, the rules for claiming accommodation expenses are changing from April 2016.

In the new tax year, contractors who have been ‘caught out’ by HMRC’s new tax rules will not be able to offset their accommodation expenses against their income, which could result in thousands of contractors paying more in tax.  

Previously, the contracting community was concerned that these changes would affect everybody working through an umbrella or personal service company (PSC). 

Government ‘back in listening mode’ on IR35

HMRC has shelved plans to change IR35 legislation for at least one year. The Association of Independent Professionals and the Self-Employed (IPSE) claims to have received confirmation that no new legislation relating to IR35 and personal service companies (PSCs) would be published in 2016-17.

At the 2015 budget, the Chancellor George Osborne indicated that IR35 Intermediaries Legislation had to be changed because it wasn’t working properly. After a period of consultation, it seems that ministers want more time to assess the impact that any changes will have on contractors. 

HMRC Travel & Subsistence
Sarah | 6 May 2016
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HMRC has been forced to issue revised guidance to contractors engaged through employment intermediaries after it made a drafting error in the travel and subsistence rules. 

Finance bill confirms travel and subsistence restrictions
marketing | 24 March 2016
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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. 

MPs may have to ‘slum it’ in student-style halls

MPs have reacted angrily to a fresh expenses crackdown, which could mean that they would be housed in ‘special serviced accommodation’ whilst staying in London.

News of this proposal comes just weeks after the Chancellor announced that some contractors caught out by IR35 legislation will no longer be able to claim travel and subsistence expenses in the new tax year.

Under the current guidelines, MPs are allowed to claim up to £20,600 per year for renting a London property. They can also claim a maximum of £150 per night if they stay in a hotel.