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Contractors may see simpler expenses rules from consultation, but not until post-2015

Contractors could see new and simpler rules governing their expenses and subsistence as a result of a new consultation just launched by the Treasury. Partly prompted by the need to develop a system better suited to contractors and other flexible workers, The Travel and Subsistence Review opens on 31 July 2014.

However, any changes to the existing regime are unlikely to happen until after 2015. The Treasury says: “Given the scope of the review and the complexity of devising a new set of rules, the government expects that this will be a longer term piece of work, and therefore has no plan to legislate for these new rules in the remainder of the current parliament.”

The consultation is in response to a report by the Office of Tax Simplification, Review of employee benefits and expenses: second report, which “highlighted elements of the current regime which are a cause of error, misunderstanding and concern for employers”.

The OTS also “proposed that the whole system of travel expenses be reviewed against changing working patterns”.

In its introduction to the consultation, the Treasury highlights that: “The government believes that these problems are symptomatic of more fundamental issues in the tax rules on travel and subsistence expenses. The travel and subsistence rules have failed to keep pace with changes in working practices.

“Since the rules were last updated there have been significant changes in the way the workforce operates, including the growth in the temporary labour market and an increase in the number of employees who work at home, neither of which is properly catered for in the current system.”

This acknowledgement that the UK’s labour force has changed significantly could benefit contractors, not only from simplification but also if the rules are changed specifically to help homeworkers and the flexible workforce.

There will be two stages to the consultation:

  • Stage 1: July 2014 to October 2014: This stage is designed to enable the Treasury to gather information about current working patterns and “to improve its understanding of the commercial realities of travel and subsistence payments”. A report on this stage will be published at the same time as the Autumn Statement 2014
  • Stage 2: winter 2014 to spring 2015: a working group will be created to devise new principles for a new travel and subsistence framework, based on the information gathered in stage 1.

Contractors and other stakeholders keen to make their views about simplifying expenses known to the Treasury can email The exact closing deadline has not yet been disclosed, but is likely to be towards the end of September or early October 2014.

Published: 31 July 2014

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