finance Bill 2016 - Travel and subsistence expenses restricted for contractors

Finance Bill 2016 - Travel and subsistence expenses restricted for contractors

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HMRC published the draft legislation on travel and subsistence in the Finance Bill 2016, the document that the contracting industry was keenly awaiting following November’s Autumn Statement did not have anything which was not known. 

Here is a list which details what the draft Finance Bill mean for contractors.

Personal Service Company (PSCs) also known as Limited company contractors

Temporary workers working through their own limited company will not be allowed to claim tax and NICs relief on travel and subsistence cost if their assignment is caught under IR35 or the worker does not receive remuneration as employment income. Unlike umbrella company contractors, the supervision, direction or control (SDC) test will not apply to limited company contractors. The new rule will be enforced from 6 April 2016 and it is important that contractors consider the IR35 status of each contract.

The document confirms the proposal will affect all businesses caught within the definition of an employment intermediary. Employees of large consultancies will only able to claim relief on their travel and subsistence to a temporary workplace and the size of the business will not affect how the proposed rules will apply.

However, nothing has been announced yet on changes regarding IR35 and contractors can continue to operate under the current IR35 regulations. This does not mean there will be no changes to the IR35 legislation in the near future and we expect further consultation on the same.

Debt transfer

There is now a debt transfer liability if misleading information is provided about a contractor’s employment status and potentially end clients and recruitment agencies will be held liable for any unpaid tax.

HMRC has confirmed that there will be further consultation on the technical aspects of the bill which will close on 3 February 2016.

Bradleys Accountants can help you review the IR35 status of all your assignments and if you have any query please email on or you can call us on our contractor tax helpline 0203 507 0022.