As expected, the Chancellor announced the publication of the long-awaited Employment Intermediaries Travel and Subsistence Consultation yesterday. The 12-week consultation will close on 30th September 2015 and new legislation will come into force 6th April 2016.
Only workers who are directly employed or on a temporary work contract are currently excluded from claiming tax relief on home-to-work travel and subsistence.
The government is proposing that all workers engaged via an employment intermediary (including PSCs) and are under supervision, direction or control should no longer be able to claim this tax relief. Engagers who knowingly use the minority of non-compliant intermediaries that misuse this tax relief could face the prospect of a transfer of liability, becoming directly responsible for the debt incurred by such misuse.
Umbrella Companies that can demonstrate that the workers they supply are not under direction, supervision or control whilst undertaking work for an engager will continue to be able to claim expenses-related tax relief on behalf of these workers.
There will also be renewed efforts to improve IR35, with HMRC opening a new dialogue focusing on the potential for bogus self-employment via PSCs.
The tax credit systems for dividends will be replaced in April 2016 by a £5,000 dividend allowance, with dividend tax rates of 7.5% for basic rate taxpayers, 32.5% for higher rate and 38.1% for additional rate taxpayers. APSCo’s head of external affairs, Sam Hurley, has warned that these measures could significantly impact the average PSC.
Finally, the employment allowance will be raised to £3,000 from April 2016 but abolished for companies where the only employee is the director (PSC) and new National Living Wage rules will also be implemented, starting at £7.20 from April 2016 and climbing to £9 by 2020.
HMRC announced a £300 million investment to tackle non-compliance by small and midsized businesses.