Travel and Subsistence Expenses for Freelancers

The HMRC issued a consultation document entitled “Employment Intermediaries and Tax Relief for Travel and Subsistence”. This consultation proposed the removal of tax relief for travel and subsistence for workers who are engaged through employment intermediaries where they are subject to supervision, direction or control, whether it happens in practice or they have the right of.

From the 6th April 2016 the ability for contractors to claim Travel and Subsistence will all depend on your ability to satisfy HMRC that there is no right to supervise, direct or control your work (SDC), using the same similar tests to IR35. The kicker is that any organisation that incorrectly advises you that there is no SDC and is later proven wrong would have the tax liability potentially transferred, if you haven’t paid it, or couldn’t pay it.

Even if a company advised in good faith and the HMRC ruled that SDC exists, perhaps through the actions of the Line Managers then the supply chain could be liable for your unpaid taxes.So whilst some individual recruitment consultants may tell you that there is no SDC, to get you to take a role, if you asked for confirmation in writing the Agency will only do so if they have the same assurance from the end client.

I doubt Hirers will want to make that assurance as it could impact them in the future if workers not pay the correct tax...let’s face it some workers will do it incorrectly, and thus clients wont give that assurance.

So in summary;

• PAYE workers on an agency payroll – they couldn’t receive tax relief anyway
• Traditional Umbrella workers will no longer receive tax relief on travel and subsistence
• PSC companies – can still claim travel and subsistence if they can demonstrate that they are not subject to supervision direction and control.