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Will 2015 be the year when travel and subsistence expenses for contractors working under umbrella companies and PSCs are axed?
The issue relating to travel and subsistence expenses for contractors working through umbrella companies was first muted in the Chancellor’s autumn statement. The subsequent discussion paper suggests that the change may need to include personal services companies (PSCs) as well.

Autumn Statement 2015
Osborne announced in his Autumn Statement a review of the "increasing use of overarching contracts of employment intermediaries such as umbrella companies", which he believes intend "to deprive people of basic employment rights like the minimum wage and avoid tax".

Discussion Paper
A discussion paper "Employment Intermediaries: Temporary workers – relief for travel and subsistence expenses", was published mid-December 2014. It outlined a number of options to close the perceived loophole, and underlined government’s intention to claw back income tax and NICs that it believes is avoided through the use of overarching contracts of employment OACs, which are commonly operated by umbrella companies. This amounts to around £400 million a year.

What might this mean for contractor expenses in the future?
Travel and subsistence expenses for many contractors that work through umbrella companies on OACs are an important part of their remuneration package, so you might hope that a contractor currently working through an umbrella company could in theory start a PSC and work through that. But government suspect that "if PSCs were excluded from any changes, there is a risk that employment agencies may be incentivised to encourage individuals to work though their limited company in order to continue to get tax relief on their home to work travel", so it looks as if PSC may be targeted as well.

Is it the end for an industry?
Bearing in mind that this sort of contractual arrangement is used widely by construction industry workers, it is my prediction that we will see a lot of them forced out of the contractor market. This will neither be good for the construction industry nor the UK economy. Given that setting up their own PSCs so that they can continue to receive their wages tax efficiently and avoid PAYE will probably not be an option, life may become very difficult with little opportunity to manage their tax affairs efficiently.

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