Employment intermediaries and travel and subsistence

Income tax relief is no longer allowable on travel and subsistence where an individual personally provides services to a client via an employment intermediary.

In effect anybody operating under an umbrella company will be caught by the legislation unless it can be shown that the individual worker is not subject to, or a right of, supervision, direction and control as to the manner in which they provide the services:

  • Supervision is considered to apply where a person checks that work is being done to the specific standard.
  • Direction is ensuring work is carried out in a certain way by providing instructions.
  • Control means someone dictating what work a person does.

The legislation will also cover personal service companies (contractors) who are within the IR35 rules. Those working outside of IR35 will not be affected and provided they reasonably expect that they will not remain at the same site for more than 24 months then it will be regarded as temporary and travel and subsistence may be claimed.

Individuals who work through umbrella companies will see that travel and subsistence which has previously been paid tax and NIC free will now have tax and NIC deducted.

If you would like any assistance with any of the above, please contact us.