Policy News Journal - 2016-17

The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal

A PDF version of the 490: Employee travel - a tax and National Insurance contributions guide has been made available on GOV.UK. The 490 has been updated to reflect the removal of tax relief for home to work travel for those working through an employment intermediary. From 6 April 2016 new legislation affects the application of the travel expenses and subsistence rules for workers who provide their services through an employment intermediary including those employed under overarching contracts of service. When such a worker personally provides services (other than an exception for ‘excluded services’ - those provided wholly in the client’s home) to a client through an employment intermediary, including a recruitment agency, umbrella company, personal service company (PSC) or other similar structure and their work is akin to an employee, then each assignment is considered to be a separate employment. This will bring the rules for these workers in line with those who are engaged directly and therefore when a worker regularly commutes from home to a workplace for each assignment they will not be eligible for relief on travel and subsistence.

When the new legislation does not apply each workplace will continue to be treated as a temporary workplace with the tax and NICs treatment following the existing rules for travel to temporary workplaces.

See section 3.41 of the 490 guide for examples.

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Travel and subsistence framework discussion paper 26 April 2016

As announced at Budget 2016 , the government will not be taking forward the proposed framework for consultation and the broad travel and subsistence rules will remain as they are.

HMRC has published Travel and subsistence - summary of responses which follows the publication of the discussion paper in September 2015 that outlined a proposed travel and subsistence framework for consideration.

Responses received made clear that, although complex in parts, the current travel and subsistence rules are generally well understood and work effectively for the majority of employees.

Recommendations in the OTS’s second report on the review of employee benefits and expenses led to the development of the proposed framework that was presented in the discussion paper. The OTS affirmed that their overall objectives for that stage of work had been:  to look for ways of modernising the systems and ensuring they are in tune with the employment patterns of today; we [the OTS] have also tried to think about emerging employment trends;  to reduce administrative burdens all round: to streamline (or preferably eliminate) procedures that can be delivered more efficiently; and  to increase certainty for employers in the rules and regulations that govern the Employee Benefits and Expenses system. HMRC has looked to build on the OTS’s work in order to find a framework that would deliver simplification. They are pleased that responses to the discussion paper supported the principles underpinning the taxation of T&S, but it has become clear that these principles do not easily translate into the new rules that were set out in the proposed framework. Having considered the responses very carefully, it is clear that the large majority of employers believe that the current system works well for most employees. Responses to the discussion paper highlighted the need for certainty and stability. HMRC has borne in mind the concerns that changes introduced under the proposed framework could replace one set of complexities for another and that this may create additional compliance burdens for employers. We therefore believe that the proposed framework does not provide enough simplicity to justify the upheaval for employers or the potential cost to the Exchequer. Specifically on T&S, the OTS acknowledged that improvements should be made without having to go through the disruption and uncertainty of discarding the current rules and starting again.


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