The Autumn Statement highlighted concerns about the increasing use of “overarching contracts of employment” by intermediaries (typically umbrella companies and employment agencies).
By using an overarching contract, which specifies that the employee’s normal workplace is the premises of the intermediary, employees are able to claim relief for the costs of travelling to and from temporary workplaces, which would not normally be allowed on the basis that it constitutes “normal commuting”.
The government will consult on detailed proposals to restrict tax relief for travel and subsistence for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end user.
It is proposed that the new rules will have effect for periods starting after 6 April 2016 and that legislation will be introduced in that year’s Finance Bill.
The pressure on employment intermediaries continues to increase. These proposals add yet more emphasis on the government’s position that employees should be directly employed by the persons who supervise and control them.