The government announced at the March Budget 2015, that it would consult on proposals to restrict Income Tax relief and the National Insurance contributions (NICs) disregard (referred to as tax and NICs relief in this document) on travel and subsistence expenses. This followed a discussion paper published shortly after Autumn Statement 2014. The restrictions will only affect those engaged through an employment intermediary, such as an umbrella company or a personal service company (PSC)).
The proposed restrictions are aimed at preventing temporary workers who are employed through employment intermediaries, and their employers, from benefiting from tax and NICs relief on their expenses for ordinary home-to-work commuting. This relief is not generally available to other workers who are employed directly or through temporary work contracts. It is an established principle of the tax system that people should not be able to receive tax and NICs relief on their travel and subsistence expenses for their regular travel from their home-to-work.
To improve compliance with the new rules, options for a potential transfer of liability were included within the consultation. Option 1 would transfer the debt jointly and severally between the engager (the person in receipt of the worker’s personal services) and the employment intermediary. Option 2 would only transfer liability from the employment intermediary if they had been misled about the nature of the work being undertaken and whether the right of supervision, direction or control existed.
More Information from egos legal consultancy:
- 201604 Landscape – forthcoming changes to the tax etc landscape, including employment allowance; dividend tax; Travel and Subsistence; and IR35; with links to sources