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New legislation concerning travel and subsistence claims

17 June 2019

Same-Day Company FormationNew legislation relating to travel and subsistence claims was introduced on 5 April 2016 which will reduce the number of workers who will be able to claim this as a tax-free expense in their business.

The new rules affect workers who provide their personal services through, what HMRC refer to as, Employment Intermediaries. Personal Service Companies (PSC) as well as an Employment Agency and Umbrella Company are considered Employment Intermediaries.

Travel and Subsistence Claims

There will not be a travel and subsistence claim allowed, if a person, through an Employment Intermediary, is under supervision direction and control (SDC) as to the manner in which the work is carried out.

It is likely there will be SDC in the manner in which the services are provided where according to HMRC guidance there are procedures, methods and instructions which must be followed (written, verbal or implied).   This does not apply to procedures which are in place for Health and Safety and other statutory requirements which must be complied with.

Each workplace will be treated as a permanent one and no claim for travel or subsistence will be allowed against personal tax  if a person provides services to a client through an Employment Agency, Umbrella Company or a PSC and there is SDC.   If an individual can show that they are not subject to SDC and the contract or total of consecutive contracts means the 24 month rule is not breached, a claim for travel and subsistence would be allowed.   The legislation overrules the 24 month rule for travel and subsistence for those where SDC exists.  If there is no SDC, the 24 month rule still applies.

If your PSC pays for your travel and subsistence and the new rules apply, your PSC will be required to operate PAYE with tax and National Insurance deductions on the full amount.  The best course of action is to pay for the travel and subsistence yourself and not to claim it as a business expense from your PSC or against your salary.

If you have concerns about this, please contact us we will put you in touch with a Professional Advisor that specialises in contract reviews that can look at your personal situation to see if a claim would be allowable.

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