What the draft Finance Bill means for travel and subsistence expenses

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Earlier today HMRC published the draft Finance Bill 2016. This basically lays out more detailed plans of everything that was discussed in the Autumn Statement at the end of November.

Many contractors and freelancers were eagerly waiting for news about travel and subsistence (T&S) expenses and IR35.

Today’s announcements about T&S were largely as expected based on the earlier consultation document. However we’re still waiting to see if any more information is revealed about IR35. Our view is no changes will be announced this year, but that does not mean that changes will not happen in 2017.

What are the proposed changes to T&S expenses?

From April 2016, T&S expenses will be restricted for contractors who are employed by umbrella companies and limited company contractors working inside IR35 (subject to supervision, direction and control). If you’re outside IR35, there’s no need to worry. Professionals using umbrella companies or running their own PSC should not be impacted as they should not fall within the new rules.

Is this a good thing for the industry?

The short answer is yes. It’s definitely not the death of umbrella companies.  Compliant umbrellas shouldn’t have anything to worry about. After all, we’ve been dealing with changes to legislation for years.

In fact, the transfer of liability to directors of umbrella companies if they’re found to be operating incorrectly will make the market as a whole much more compliant and something that we have been asking for years.

Contractors operating via a limited company or looking to make the switch just need to check that their assignment is outside IR35. Our sister company ClearSky Contractor Accounting is well placed to advise on this.

Our brand promise is to be with you all the way so we’ll make sure that we find a compliant solution that suits our agency partners, clients and employees.

More detail will likely follow over the coming weeks so keep an eye on our blog for the latest updates.