Budget 2015 - what the Chancellor announced...

On Wednesday 18th March, in his 2015 Budget, the Chancellor announced that the government will now consult on detailed proposals to restrict tax relief for travel and subsistence for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, where that worker is under the supervision, direction and control of a third party.

This follows on from the discussion document released in December 2014, which Orange Genie took an active part in responding to. The proposals announced are different from those included in the discussion document and reflect the feedback and evidence HMRC received in response to that document.

Any changes will take place after this full and formal consultation and would be intended to take effect from 6 April 2016 and legislated for in a future Finance Bill.

The Chancellor also announced; the government wants employment intermediaries to provide workers with greater transparency on how they are employed and what they are being paid, with the Department of Business, Innovation and Skills consulting on proposals later this year.

The current proposal is to remove workers’ entitlement to claim tax relief for travel and subsistence for their home to place of work where;

The worker is supplied by an intermediary to a third party (an intermediary will include umbrella companies and personal service companies);

The worker is broadly subject to direction and control by that third party.

So, the aim is that somebody who broadly looks like an employee will not be entitled to relief whereas someone who looks like a self-employed worker will continue to be entitled to relief. This approach is supposed to align with that taken for agency workers in the Finance Act 2014.

HMRC will be consulting on the detail of the proposal over the summer.

Further information can be found in the Budget document (link below). The relevant paragraphs are:

Chapter 1 - Umbrella companies and employment intermediaries
- para 1.250

Chapter 2 - Employment Intermediaries: travel and subsistence (umbrella companies)
- para 2.79

Budget document >> click here 

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