The government’s proposals to remove tax relief on home-to-work commuting for some Umbrella Company Employees and limited company directors has met with divided reactions from prominent industry bodies.
From April 2016 the government plans to prevent intermediaries that supply workers who are under supervision, direction or control from claiming home-to-work commuting tax reliefs.
Umbrella Companies and PSCs supplying skilled professionals who are not under supervision, direction or control, however, will be permitted to continue to claim these allowances on behalf of the workers they supply.
APSCo’s head of external Affairs, Sam Hurley, acknowledged that several of Mr Osborne’s summer budget announcements were relevant to the professional recruitment sector, “including, of course, the anticipated consultation on travel and subsistence tax relief.”
She described the proposed measure as “a reasonably sensible way forward.”
By contrast, IPSE’s chief executive, Chris Bryce, was scathing, arguing that independent professionals travel all over the UK and abroad, visiting their clients’ sites and providing their expertise – activities that are so expensive they will no longer possible if they are not tax deductible.
The proposal, Mr Bryce argued, could result in independent professionals finding their business opportunities cut off and clients finding a vital resource supply terminated.
Describing the proposal as “short-sighted” and “bad for business”, Mr Bryce added that the restriction “will put the UK’s smallest businesses at a huge competitive disadvantage to large businesses. A consultant working on his own will no longer be able to take a contract with a client at the other end of the country, but KPMG will. I believe that unless these rules are implemented very carefully they will have detrimental impact on the whole UK economy.”