George Osborne kept his cards close to his chest in the Autumn Statement ahead of expected reforms to taxation of temporary workers. In his speech there was no mention of travel and subsistence tax relief or IR35 however the devil was in the detail.
Changes to travel and subsistence tax relief were addressed in the corresponding document with the exact extract below;
“3.20 Employment intermediaries and tax relief for travel and subsistence – 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. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.”
It’s fairly self-explanatory with T&S tax relief likely to be removed for umbrella employees and PSCs that are within IR35. However we’ll know the full impact when the draft legislation is shared on the 9th December.
IR35 was not mentioned within the speech or the statement as we and many others were expecting but the FCSA have shared with us a comment that HMRC have shared with them;
“HMRC have told us that “We published a discussion document on 17 July 2015, and received over 160 written responses, as well as holding 14 roundtables and other meetings, which many of you attended. The government is considering those responses. As set out in the discussion document, the government’s objective is to find a solution that protects the Exchequer and improves fairness in the system, without creating disproportionate burdens on business, or widening the scope of the rules.”
We’ll be updating you after the 9th December with regard to changes to travel and subsistence and when any further developments are made around IR35. If you’d like to discuss anything in the meantime then please do not hesitate to get in contact.
John Lyon, ICS Managing Director