Autumn statement 2015
Today the Chancellor announced what was perhaps the most widely anticipated Autumn Statement for many years amongst the contractor community. It was widely expected that an announcement would be made regarding the future of IR35, particularly following HMRC’s discussion document on the reform of IR35 and several recent press articles suggesting a radical change was imminent.
The Chancellor however, did not reference IR35 reform in his speech and there is no mention of IR35 in the Autumn Statement publications. Additionally, as a result of our involvement with the IR35 forum, we were today contacted by HMRC on this topic. They have advised us that they have received over 160 written responses to their discussion document on the scope to reform IR35 and they are still considering their position. They also reiterated that their objective is to “find a solution that protects the Exchequer and improves fairness in the system, without creating disproportionate burdens on business, or widening the scope of the rules”.
Brookson has engaged at every opportunity with HMRC during the period of discussion around IR35 reform and have repeatedly emphasised the importance of not rushing through any changes without fully considering the implications on the UK’s valuable flexible workforce. We are therefore pleased that HMRC and Treasury have today not made any announcements regarding IR35 that will have a detrimental impact on the genuinely self-employed.
Our view is that Brookson’s limited company customers should not be concerned about any imminent changes to the IR35 rules. We expect a further period of consultation between HMRC and interested parties, which we will of course continue to be heavily involved in and will update you further once more information becomes available which may be as early as 9th December.
Tax relief for travel and subsistence expenses
Another widely anticipated change was regarding umbrella company employees and limited company contractor’s eligibility to claim tax relief on travel and subsistence expenses.
Whilst the Chancellor did not make reference to this in today’s speech, the Autumn Statement documents confirm that from 6 April 2016 the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through umbrella companies. The details we have today do not confirm what criteria will be used to restrict the relief nor where the liability for non-compliance lies. We expect further details on 9th December when draft legislation is published. We would however expect that expenses will be restricted for umbrella employees who are under the supervision, direction or control of anyone in the supply chain.
HMRC’s original proposals were to extend the restriction to claim travel and subsistence expenses to limited company contractors. Following feedback received during the consultation period, relief will only be restricted for limited company contractors who are captured by IR35. As a result, the majority of Brookson’s limited company customers will not be impacted by any restrictions on their ability to claim tax relief on travel and subsistence expenses. We are again pleased that HMRC have listened to ours and many other parties’ concerns regarding their original proposals.
Budget Summary Guide
A summary of key tax rates and allowances, including the new dividend tax, can be found in our Budget Summary Guide.