Tax relief restricted for many contractors from April 2016

Are HMRC digital tax accounts a good or bad thing?

HMRC has confirmed that people working through umbrella companies will no longer be able to claim tax relief on travel expenses.

Only those who can pass a test of being genuinely self-employed will be allowed to set these costs against expenditure in their accounts.

From April 2016, tax relief will be stopped if an individual is employed by an intermediary but is under the “supervision, direction and control” of an end user.

In addition, tax relief will be stopped if services are provided through a personal service company (PCS) and the engagement is caught by the Intermediaries Legislation (IRS35).

Once the definition and further guidance has been issued on the term, “supervision, direction and control” has been published by the HMRC, businesses will need to review the way they use temporary labour and all or any existing documentation that may be in-situ between them and employment intermediaries.

Contractors will need to take appropriate advice and make their decisions about which supply model to use.

Could you be affected by these new changes? Will your business have to take a look at how you manage your temporary labourers? Omni Chartered Accountants are here to provide advice and guidance and welcome any queries that you may have on this topic.

Tax relief restricted for many contractors from April 2016

You can request a free of charge call-back from our website or call us today for a chat about your circumstances on 01902 837 408 – we will be happy to help!


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