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Contractor clients urged to support fight against contractor T&S restrictions

Contractor clients are being urged to help gather evidence on the impact that restrictions on travel and subsistence (T&S) expenses will have on UK plc, before planned legislation comes into effect on 6 April 2016.

Key contracting stakeholders – including the Confederation of British Industry (CBI), the Chartered Institute of Personnel and Development (CIPD), the Recruitment and Employment Confederation (REC) and the Freelancer and Contractor Service Association – are encouraging contractors to circulate an online survey to their clients in a last ditch effort to block Government changes.

Plans to remove T&S tax relief for umbrella company contractors and personal service company (PSC) contractors deemed to be under the ‘supervision, direction or control’ (SDC) of a client were confirmed when the Government released its draft Finance Bill in December 2015.

Whilst HMRC concedes that the measure isn’t expected to have any significant impact upon its overall tax yield, it is believed that an estimated 750,000 contractors and freelancers will see their annual income decrease by at least £3,500 as a result.

HMRC claims it is up to contractor clients to make up this deficit, stating: “Where business wishes, or needs to recruit workers living some distance away to work for them, the Government expects business to pay a wage sufficient to attract workers without any special tax subsidy being necessary.”

However, stakeholders argue that the Treasury has underestimated the severity of the impact that this additional financial burden will have on businesses.

“We implore companies to tell us what the knock-on effect of the removal of T&S relief will mean for them as they don’t seem to realise that they will bear the additional costs and they will not have the skills they need at their disposal,” highlights CEO Julia Kermode.

“The Government failed to heed protests where the impact on contractors was the main concern, but what’s slipped under the radar for most is the detrimental impact that the changes are set to have on contractor clients,” adds ContractorCalculator CEO Dave Chaplin.

“UK plc has been quiet on the matter so far, which is unusual considering the substantial burden it is set to take on as a result of higher assignment rates and a likely reduction in available contractors.”

Contractors are encouraged to ask their clients to take part in the survey before it closes on 29 January 2016 so that the contracting’s stakeholders can present a case to Government prior to the deadline for comments on draft clauses on 3 February 2016.

Published: 25 January 2016

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