Further to our earlier blog post, legislation introduced in April 2016 restricts access to tax relief for home to work travel and subsistence where a worker:
- personally provides services to another person
- is employed through an employment intermediary (typically an umbrella company or recruitment company)
- is under (or the right exists to) the supervision, direction or control of any person, in the manner in which they undertake their work
What does this legislation mean? Prior to this legislation, applicable contractors had a right to claim their travel and subsistence expenditure against their taxable income and there for relief on PAYE and NICs. Travel included journeys for work and also home to their temporary workplace. Under the same models, this tax relief is no longer available. What happens now? Umbrella companies operating within the law before April 2016 need to now make changes to ensure that continue to do so in order to ensure that all parties in the chain are protected. We will shortly be updating you as to the new requirements for being able to claim expenses; which all centre on Supervision, Direction or Control. In the meantime, these changes could see workers experiencing a cut in their take-home pay since they no longer receive tax relief against their business activity expenses – if this has impacted upon you have any questions please as always give us a call on 02071642116.