It was good news for Contractors and Umbrellas following on from the Chancellor’s Pre Budget Report this week, with the decision not to change the current rules regarding Tax relief for travel expenses.

“Following the consultation Tax relief for travel expenses: temporary workers and overarching employment contracts, the Government has decided to leave the current rules unchanged. However, in the light of evidence from the consultation confirming poor levels of compliance in this area HMRC will refocus its efforts to ensure that the current regime is properly applied. If compliance does not improve, the Government may return to this at a later date.”

In a move that will be welcomed from an industry wide perspective, it is not one that carries good news for all, with the report outlining that there will be heavy monitoring of compliance within the industry. It could therefore spell the end for several players in the market.

Colin Howell, joint Director of Crystal Umbrella and on the Board of Directors at the AEMC, stated that this move could finally level out the playing field across the Umbrella Industry, to ensure that compliance is upheld. “The fact that the Government will be monitoring the compliancy of the industry will help to ensure that the level of inappropriate activity is diminished, and a comprehensive set of standards is upheld.”

Another issue that will certainly affect the Industry is that the Government plan to act in 2009 in regards to Income Shifting.

“The government firmly believes it is unfair that some individuals can arrange their affairs to gain a tax advantage by shifting part of their income to another person who is subject to a lower rate of tax. The government considered the responses received to the recent consultation and believes that a further period of consultation will ensure that the legislation in this area provides clarity and certainty for businesses and their advisers. The government now intends to introduce legislation through Finance Bill 2009 and will not enact the planned legislation changes effective from 6 April 2008.”

Therefore, it is a case of watch this space in regards to Income Shifting, but for now, Contractors and Agencies alike, can continue to operate with secure and trusted payment solution providers, such as Crystal Umbrella, and ensure that they are operating legally and without risk.

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