Stopfords
Stopfords

Proposal to Restrict Tax Relief for Travel Expenses for IR35 Workers

Date:
Category:
Latest News

One of the controversial measures included in the draft Financial Bill 2016 was the proposed restriction of the deduction for travel subsistence expenses incurred by certain workers caught by the IR35 rules. This proposed change was consulted on during summer 2015 and, if enacted, will significantly restrict the tax relief available for those affected.

The original proposals have been toned down to a certain extent and will only apply if the IR35 rules apply to the engagement and there is supervision, direction and control (SDC) over the worker. The now seems to be the key test to determine whether the new rules will apply and ignore the other employment status factors. The examples in the consultation document seem to suggest that if there is no expertise within the end user organisation then there is likely to be limited SDC and the worker will be entitled to relief for travelling to the clients premises.

Any tax debt arising from the deliberate misapplication of the rules is to be transferred ‘jointly and severally’ from the ‘intermediary company’ to its director(s). It would appear that the ‘engager’ will not now be liable, which was one of the proposals in consultation. It is intended that these rules will be implemented where it can be shown that the ‘intermediary’ had knowingly failed to apply the rules correctly.

Please contact us if these new rules are likely to have an impact on your business.

Related news

The legislation to introduce the new system of dividend taxation announced in the summer budget has now been included in the draft Finance Bill.

View article about 7.5% increase in Income Tax on dividends to proceed

The Government announced in the 2015 Budget Statement, the introduction of a Personal Savings Allowance and the ending of the Tax Deducted Scheme for interest. This scheme required banks/ building societies to deduct tax from interest paid on deposits, for certain business and personal accounts.

View article about Changes To The Way We Pay Interest

What our clients say