Seeing as the Finance Bill 2016 gave us a much clearer picture of the restrictions to tax relief on travel and subsistence for workers engaged via an employment intermediary (a PSC or umbrella), let’s explore how they might play out in the ‘real-world,’ writes Marc Scott, a director of Liberty Bishop.
As of the new tax year (6th April 2016), new restrictions will apply to the application of tax relief on travel and subsistence expenses when the worker in question is engaged via an employment intermediary (the definition of which encompasses both an umbrella company and a PSC).
The restrictions essentially revolve around the issue of employment status and basically state that if an individual’s working practices indicate that they are more like an employed-type worker, then access to tax relief on travel and subsistence will be denied. But this is where it gets a bit more complicated, because there isn’t a singular test that is to be used in order to determine whether or not a worker is an employed-type worker. Instead there’s actually two different tests: