Skip to main content

So, as expected, the Budget 2016 announced yesterday, did little to shed any light on the subject of Travel & Subsistence claims for contractors working through an umbrella company… No mention during the Chancellor's actual speech, shortly followed by the release of the Red Book, so did this go anyway to helping clairify the situation? In short… No!

So what did it say?

"2.38 Travel and subsistence expenses rules – In September 2015 the government published a discussion document aimed at modernising the tax rules for travel and subsistence (T&S). The government has analysed responses and concluded that, although complex in parts, the current T&S rules are generally well understood and work effectively for the majority of employees and has decided not to make further changes to the T&S rules at this time.

2.39 Employment intermediaries and relief for travel and subsistence – As announced at March Budget 2015, the government will introduce legislation in Finance Bill 2016 to restrict tax relief for home to work travel and subsistence expenses for workers engaged through an employment intermediary. This will bring the rules into line with those that apply to employees. (Finance Bill 2016)."

So in short, contractor's working through an umbrella company will only be able to claim expenses via Self Assessment at the end of the year, if every party along the chain, from end client, to agency, to contractor, to umbrella company can confirm that there is no Supervision, Direction and Control (or the right of). As to what will be deemed acceptable as evidence that no SDC exists is another matter and one that even legal employment specialists cannot determine outright.

Contractor Umbrella has contacted HMRC to ascertain whether there is likely to be any further guidance issued before the Legislation comes into force, to which we received the following response: "Guidance on the new changes to relief on travel and subsistence for people working through T&S will be published on 6 April."

So what else was said that may affect the contracting industry in general?

  • A reduction in the corporation tax rate to 17% from 2020.
  • Capital gains tax rates will also be reduced from 6 April 2016.
  • A new Investors' Relief will provide a lower rate of capital gains tax on sales of certain new shares.
  • A new Lifetime ISA will be introduced from 6 April 2017 for the under 40s.
  • The personal allowance and higher rate threshold will both increase.
  • Thresholds for business rates will reduce.
  • There will be a significant reform of corporation tax losses.



Take Home Pay Calculator