Working as freelancer, through an agency or a temp can be a long term venture for many people, it provides the freedom to try new roles, or to consult for businesses who are in need of expertise that are not available in house. However, in turn this can come with challenges, remuneration may vary and, of course, you will need to complete your own Tax Self-Assessment (hyperlink to NM SA pages), and while flexibility may be useful, there may not be the full range of benefits available to temporary workers as employees. On the 6th April this year, temporary workers saw changes to the entitlements that they can claim. The measures, announced in the 2015 budget and coming into force this year, mean that tax relief applied to work-to-home travel expense will no longer count if an umbrella or limited company worker has direct supervisor or controller at their workplace.
The move is a direct response by the government to clamp down on what they see as those exploiting the tax system to reduce their own costs. Although it is difficult to say how widely spread this has occurred, it is aimed at preventing a small number of intermediary or umbrella companies providing tax relief against the home to work travel for their contractors which may have been exploited. Tax relief was not available to permanent workers and it may have been seen as a tax avoidance measure rather than being a help to those genuinely self-employed.
The new measures mean that an employee or limited company director working within IR35 cannot claim tax relief on travel and subsistence. Contractors who do not work within IR35 will not be affected. This will also affect company directors who have previously been ‘caught’ by the IR35 system and will not be able to claim in this way, even if they have done so before.
The changes to IR35 are far reaching and you would do well to check your eligibility. If you need financial assistance with any aspects of being self-employed, including your accounts and self-assessment, or you are a company who employs temporary workers and require assistance in managing your taxes and accounts, talk to our knowledgeable and friendly team at Newton Magnus today.
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