Travel & subsistence expense relief claims

Being able to claim expenses for travel & subsistence can substantially effect a contractor’s take home pay. The increase in the use of employment intermediaries including PSCs and umbrella companies, however, has prompted a reform:

“Whilst many travel and subsistence expense relief claims made by workers employed through employment intermediaries are both fair and compliant, the increase in the use of employment intermediaries now means a large number of workers are able to access tax relief that the majority of workers cannot, even when these workers hold very similar jobs.”

From 6th April 2016, workers operating via an employment intermediary, including limited company contractors, who are supplying a personal service and are subject to the supervision, direction or control of any person, will be denied claims for travel and subsistence expenses.

The IR35 status tests involved in this reform are nothing new; the right of substitution/personal service and degree of control have long been top indicators of employment status. Any contractor who has the right to provide a substitute and has autonomy over their method of work will maintain their right to claim this type of expense.

The proposal will be finalised with a further announcement planned at Autumn Statement 2015, with changes to be introduced in the Finance Bill 2016 and implemented with effect from 6th April 2016. You can view the full Employment Intermediaries and Tax Relief for Travel and Subsistence document here.

Many contractors have expressed concerns regarding the travel and subsistence changes now that their employment status also effects this type of expense claim. Our Tax Enquiry & Tax Liability insurance policies still cover you for representation in any status enquiry, which in turn defends you against enquiries into your travel and subsistence expense claims. We are currently reviewing the liability aspect of our Tax Liability Cover in response to this amendment and should any changes occur, these will be announced in due course.