Autumn Statement 2015: Employment intermediaries – travel & subsistence

Under the temporary workplace rules, an employment intermediary such as a personal service company (PSC) or umbrella company can provide a worker with an opportunity to claim for travel and subsistence expenses incurred in relation to various work assignments, by using overarching employment contracts.

The Government confirmed at Summer Budget 2015, that it will legislate to restrict tax relief, with effect from 6 April 2016, for travel and subsistence expenses for workers engaged through an employment intermediary such as a PSC. The restriction will only apply where the worker is providing personal services to an engager where they are under the right of supervision, direction or control of any person.

To support increased compliance, the government proposes to include a transfer of liability provision whereby the exposure can be transferred to the engager where false information has been provided. Payments made for expenses under such circumstances will be treated as earnings subject to PAYE.

The introduction of these rules alongside new rules restricting the use of salary sacrifice by employment intermediaries will have a fundamental effect on such businesses and workers that operate within them. All current arrangements should be reviewed to assess the level of exposure.