The Freelancer and Contractor Services Association (FCSA) is spearheading a campaign with 36 of the UK’s largest Umbrella Companies to oppose HMRC’s proposed abolition of tax relief on travel and subsistence (T&S) for temporary workers.
The collaboration, which represent some 100,000 Umbrella Company Employees, conducted its own research and found that T&S expenses represented just 10% of turnover on average, strongly indicating that the tax losses incurred by HMRC are minimal. The research also found that Umbrella Company Employees claim mileage of 181 miles a week on average (35 miles a day), which is almost double the national average of 18.5 miles a day.
The abolition of tax relief would leave many Umbrella Company Employees worse off and may well deter them from undertaking contracting assignments that require travel. Should these workers leave Umbrella Employment, an unintended consequence of HMRC’s clampdown would be a tax loss.
FCSA chief executive Julia Kermode said that HMRC had again ignored the benefits of Umbrella Employment for skilled workers, agencies and end clients alike. She added: “The removal of T&S relief will force many workers to only consider assignments within a restricted travel area, which in turn will result in a less-qualified and less-effective workforce. This will damage productivity of end client companies, who will have a less-qualified workforce to select from, reducing the effectiveness of those businesses or increasing the cost of the flexible workforce to those businesses and, therefore, reducing profits and damaging the state of the UK economy as a whole.”
The new collaboration, she said, wished to help HMRC “get it right in the best interests of everyone”.