An industry group is urging contractors to make their voices heard over Government plans to restrict subsistence and travel expense claims for umbrella company employees.
Travel / Subsistence expenses restriction – background
On 16th April 2014, HMRC published a document – “Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses”, which outlined the Government’s plans to outlaw the exploitation of travel and subsistence rules via the use of overarching contracts of employment.
This practice is believed to have been used by a small number of umbrella firms, which allowed them to undercut their ethical rivals, and may also have cost the Treasury as much as £400m in unpaid taxes.
Put simply, some firms have used overarching contracts of employment to provide their temps/employees with tax relief on their home-to-work travel expenses – something that is not available to employees in general.
Interested parties were given until 10th February 2015 to submit their responses to the HMRC document.
Subsequently, in the Budget 2015 documentation (pages 61-62), the Government stated that travel and subsistence relief will be restricted for umbrella or limited company workers who are deemed to be under the ‘supervision, direction and control of the end-user’.
Employers will now need to provide greater transparency over how their employees are paid and explain precisely why any deductions are made from gross pay.
Although many industry experts back a ban on any industry malpractices, there is a widespread concern that the Government may implement new legislation which unfairly targets scrupulous employment service providers, as well as the intended targets. So, the progress of this particular consultation is being watched with great interest.
The new rules are expected to come into effect during April 2016, following a consultation period.
How to submit your response to the Budget 2015 announcement
All Umbrella Companies Are Equal (AUCAE), which has campaigned against the unscrupulous practices carried out by unethical umbrella companies for several years now, says that although the industry’s response to the initial discussion document was “vast and detailed”, the views of those most likely to be affected (temps and contractors) appear not to have been heard.
As a result, the group has set up a page on its website to allow contractors to contribute their views on the forthcoming restriction to subsistence and travel expense claims. All views will be collated and included in the industry body’s formal response to the Budget 2015 announcement.
If you feel you will be affected by the proposed changes, or simply want to comment on the document, you can take part here.