Chancellor George Osborne’s last budget before the general election has done little to clarify the situation for contractors with regard to claiming tax relief on travel and subsistence.
In his budget speech he said, “We will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella
companies who abuse tax reliefs on travel and subsistence – while we protect those genuinely self-employed.”
As we’ve reported previously we are concerned about this and the impact it could have on our contractors as well as the negative impact it could have on businesses and the economy as a whole.
At Exchequer Solutions we are keen to improve understanding of how our sector operates. We have been getting involved, along with a group of reputable, compliant umbrella companies and other partners to provide a clear picture to the government and HMRC of what we do and how we benefit those registered with us.
One of our key concerns at present relates to what George Osborne said in his budget speech and that it will penalise workers who work away from home on temporary assignments. We believe that if the opportunity to claim travel and subsistence is taken away many workers will feel that working long distances from home is no longer viable. We believe the impact of this will go further than just the contractors currently claiming tax relief on travel and subsistence. As a consequence it could significantly reduce the availability of flexible workers. A flexible workforce is one of the fundamental factors behind the UK Economy’s recent growth out of recession
HMRC have indicated there will be a consultation document later this year to discuss ways of changing the rules to restrict travel and subsistence tax relief. This will create a year of uncertainty and confusion for all concerned parties, however it potentially gives us all the chance to educate the government and explain the positivity of the flexible workforce. We will continue to engage with the Government throughout the consultation period and will keep all parties informed regarding changes in the future.
