Employment intermediaries: relief for workers’ travel and subsistence

The Autumn Statement 2014 announced a review into the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses.

Although this decision is not binding on other tribunals, it is important because, it neatly resolves the potential conflict between EU law and domestic legislation. If it is followed in other cases, it may pave the way for more holiday pay claims to be brought involving different types of commission schemes and potentially discretionary bonuses and other forms of remuneration.

As such relief is not available to workers generally, the Government wants to address this perceived unfairness.

As a result of the review, the Government is proposing to change the rules to restrict travel and subsistence relief for workers engaged through an employment intermediary such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user of the services of the worker.

The changes will take effect from 6 April 2016 following a consultation on the detail of the changes, and will be legislated for in a future Finance Bill.

The Government also wants employment intermediaries to provide workers with greater transparency on how they are employed and what they are being paid, to help workers understand how their take-home pay is affected by these travel and subsistence arrangements. The Department of Business, Innovation and Skills will consult on these proposals on transparency later this year.

It was also announced that the Government will also make a minor amendment to the Finance Bill 2015 to correct legislation underpinning the penalty regime for the late filing or non-submission of quarterly returns from employment intermediaries. This has been in effect since 6 April 2015.