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Chancellor ups tax take

As part of its ongoing programme of step-by-step legislation to clamp down on the various payment models involving ‘bogus self-employment’, HMRC introduced changes, from 6 April 2016, which will prevent certain temporary workers from being able to claim tax relief or disregard for National Insurance contributions (NICs) on the travel and subsistence expenses they incur in ordinary home-work-home travel.

These new restrictions will apply to workers who:

  • are employed through an employment intermediary, such as an umbrella company, a personal service company, or an employment business (’labour agency’);
  • supply personal services (i.e., principally, their skills or labour); and
  • are subject to (or to the right of) under the supervision, direction or control of any person as to how the workers concerned do their jobs.

The measure is aimed at preventing such workers and their employers from benefitting from tax relief and NICs disregard for home-work-home travel expenses. It is an established principle in the UK tax system that people should not be able to claim relief on their regular commute from home to work. The new measure will put workers employed through an Intermediary on the same tax and NIC terms as other workers, contracted directly, or through an agency contract.

For BESA contractor members who directly engage employees under the terms of the BESA Operative National Agreement and who are not engaged through an employment intermediary, the special tax/NI arrangements contained in Appendix D of the National Agreement will continue unchanged for those employees.

New Rules relating to the Supply of Temporary Workers

The Agency Workers Regulations and the Intermediaries legislation – as well as the above new rules relating to employment intermediaries and tax relief for travel and subsistence – have introduced new, and sometimes complex, rules on the recruitment sector relating to the supply of temporary workers.

Members of the Agency Alliance have been provided with precedent contracts, checklists and guidance which properly regulate the relationship between the agency and an umbrella company, between the agency and the PAYE workers it lets and between the agency and the hirer (such as a BESA contractor member), which take proper account of the provisions of the Intermediaries legislation.

More information about how the agencies in membership of the Alliance address these complex issues with the aim of guarding against the risks and challenges raised by the Intermediaries legislation can be seen by clicking here to access Workforce 40 issued in April 2015.

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