Government claims that construction workers employed by Umbrella Companies will be relatively unscathed by the planned abolition of travel and subsistence (T&S) tax relief have come under heavy fire from the Union of Construction, Allied Trades and Technicians (UCATT).
The change, which is estimated to affect 430,000 contracting professionals, “is not expected to have any significant economic impact”, according to a policy document from Her Majesty’s Revenue & Customs (HRMC) that calculates workers will be just £360 a year worse off.
However, UCATT has lent its voice to a strengthening chorus of criticism about the planned relief abolition, describing HMRC’s calculation as “a gross underestimation of the financial impact on British workers”.
In reality the average construction worker employed via an Umbrella Company will be £3,369 a year worse off, according to union experts.
The average construction worker has weekly travel expenses of £144, which under the new law will be taxed at 45 per cent – 20 per cent income tax plus employees and employers National Insurance contributions (NICs). As a result, they will lose £64.80 per week, or £3,369 a year.
UCATT National Secretary Brian Rye said: “In the real world, £3,369 less a year will mean a lot less food on the table. Almost half a million workers will be significantly worse off after April, when this measure is introduced. For those that have to travel to several sites for their work, the hit will be massive.”
Mr Rye accused HMRC of “belittling the impact this tax change will have on construction workers”.