We reported earlier this week on the Office of Tax Simplifications IR35 Review which will make recommendations to the Chancellor George Osbourne in time for next year’s Budget. However, this is not the only task at hand for the OTS.

The body is also charged with reviewing tax reliefs which could also have a knock on effect for contractors. The Office will be looking at all personal and business tax reliefs, exemptions and allowances which are currently permissible by HMRC and deciding if any should be repealed. They will also be looking to simplify many of the tax reliefs since the overall aim of the government in reviewing the country’s taxation systems is to make them simpler.

The top priority for the OTS will be the reliefs which have been in existence for a really long time and those which are infrequently used. It is likely that some of the reliefs which will be come under scrutiny during this process are the travel and subsistence breaks. Any changes to these reliefs would have a knock-on effect on umbrella contractors. This has already attracted opposition from the Freelancer and Contractor Services Association (FCSA) who feel that such changes would undermine the strength of the flexible workforce.

FCSA chairman, Stuart Davis, commented: “The FCSA hopes that the OTS is not just Government window dressing or an excuse to remove important tax reliefs, but is independent of Treasury and will have real teeth in simplifying tax for the different labour markets in the UK.”

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