Publication of draft clauses in the finance bill detailing changes to tax relief for travel and subsistence costs has drawn hostile responses from the freelancer world.
The changes, which will take effect from April 2016, have met with considerable opposition from organisations that believe they are unfair. Relief will be restricted for anyone engaged through a Personal Service Company or Umbrella Company. Other workers affected will be those supplying personal services and anyone subject to supervision, direction and control (SDC).
The bill, should it become law, will ban Umbrella Company Employees from claiming any expenses incurred in travelling to the workplace. Given that Umbrella Company Employees frequently travel considerable distances to reach a client, this measure appears punitive.
Damian Broughton, MD of the accountancy firm Danbro, slammed the government for ignoring the evidence and opinions of the UK’s freelancing and contracting sector and described the measures as a “stealth tax.” He added: “Thousands of businesses rely on freelance workers to provide the skills they need in a cost-effective and efficient way. This is the modern way of working and the chancellor is risking the health of our economy by restricting its growth.”
Crawford Temple, CEO of the pressure group PRISM, was similarly scathing, stating: “Officials using contractors to staff hospitals, schools and big public projects are going to get an awful shock when they start putting their hand out for more, just so they can take home what they were earning a month earlier.”
Private companies struggling to survive by using flexible workers to cut full-time wage bills will, Mr Temple said, also be hit hard.