After discussions, consultations and representations from businesses, trade associations and professional bodies across the sector unfortunately the autumn statement has confirmed our fears. What was positioned by the Chancellor in the summer budget as the promotion of a fairer deal for all, Contractors will be forgiven for feeling left out in the cold having not had their voices heard.
Today, the Chancellor confirmed that;-
‘…As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company…….This change will take effect from 6 April 2016.’
This means, as of April 2016, the proposal to remove travel and subsistence relief for any contractor employed on an over-arching contract of employment who is subject to (or subject to the right of) Supervision, Direction or Control (SDC) will be implemented.
Notwithstanding that the devil, as always, is in the detail, the practical implications are that this, coupled with the new statutory exemption that replaces dispensations detailed in the Finance Bill 2015, will result in contractors being much worse off, the traditional Umbrella model being inoperable and Agencies who run their own in house travel and subsistence arrangements no longer being able to do so.
The only marginal gain from today’s statement was confirmed as;-
‘…Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies…’
This means that PSC’s not captured by IR35 will still be entitled to travel and subsistence relief. However, with the new dividend tax effective as of April 2016 and a rewritten, more powerful and far reaching IR35 due for April 2017 one can see why the news is seen as only a ‘marginal gain’.
So what now for Agencies and Contractors? How can this unprecedented attack be repelled? As always, there is light at the end of the tunnel. Anderson Group have developed innovative solutions to enable Agencies and Contractors to meet and match these challenges and remain compliant, competitive and sustainable post April 2016. We will be contacting you to discuss the budget proposals in more detail and our solutions of the future that are available to implement now. Alternatively, if you would like to arrange a
meeting, we would be delighted to hear from you.
If you have any questions please contact us at 0333 8000 800 or firstname.lastname@example.org