HMRC looking to curb travel expenses for self employed?

HMRC looking to curb travel expenses for self employed?

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Moonhawk

Original Poster:

10,730 posts

218 months

Tuesday 28th April 2015
quotequote all
I have just received an email from my accountant which indicates that HMRC are looking to put curbs on tax deductible travel expenses and subsistence allowance for self employed and freelance workers.

Whilst they say this won't affect sole traders and people running their own limited company to start with (it's initially aimed at people working under umbrella companies) - they do fear that will be the next logical step.

Anyone else heard of this?

LivingTheDream

1,753 posts

178 months

Tuesday 28th April 2015
quotequote all
yes - its been on the agenda for a while and I seem to remember it being announced in the budget statement.


ralphrj

3,507 posts

190 months

Tuesday 28th April 2015
quotequote all
I think it was in the Chancellor's Autumn Statement that they were looking into it but I hadn't seen any concrete plans.

ETA: Having seen Livingthedream's post I've checked the 2015 Budget.

2015 Budget said:
Umbrella companies and employment intermediaries

1.250 Autumn Statement 2014 announced that the government would review 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, relief not generally available to other workers. This is unfair. As a result of the review, the government will 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. This will take effect from April 2016 following a consultation on the detail of the changes. It will level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not.
Edited by ralphrj on Tuesday 28th April 11:25

Moonhawk

Original Poster:

10,730 posts

218 months

Tuesday 28th April 2015
quotequote all
^^ yep that's the one.

Studio117

4,250 posts

190 months

Tuesday 28th April 2015
quotequote all
fking s.

ralphrj

3,507 posts

190 months

Tuesday 28th April 2015
quotequote all
Moonhawk said:
^^ yep that's the one.
Re: the point you raised earlier.

I think that you'll have to wait until the consultation is complete to see what impact it will have. I suspect that 'irregular' travel expenses and subsistence will still be allowed but the current rules that allow you to claim travel expenses travelling to the same place every day as long as it doesn't go over 2 years will end.

Zyp

14,673 posts

188 months

Tuesday 28th April 2015
quotequote all
You'll be able to vote these muppets out next Thursday.

From then on, I suspect not being able to claim so much will be the least of our worries...
hehe

DeanR32

1,840 posts

182 months

Tuesday 28th April 2015
quotequote all
Last week, I travelled to brighton mon/tues, weds/thurs in Blackfriars, London, and Bromley Friday, all from Southend on Sea. That equates to a bit over 500 miles.

That'll be a kick in the teeth come April time!

richie99

1,116 posts

185 months

Tuesday 28th April 2015
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It will apply to MPs as well presumably.

sanguinary

1,344 posts

210 months

Tuesday 28th April 2015
quotequote all
richie99 said:
It will apply to MPs as well presumably.
You're a funny guy!

Jasandjules

69,825 posts

228 months

Tuesday 28th April 2015
quotequote all
I trust this will make no difference if you charge for your travel time instead (upon which you would already pay the relevant taxes).

Esseesse

8,969 posts

207 months

Tuesday 28th April 2015
quotequote all
It never occurs to a government to make the travel expenses 'fair' they could just allow relief on all travel related to going to work. In fact, shouldn't this be the preferred option for a right leaning government (they're not)?

ralphrj

3,507 posts

190 months

Tuesday 28th April 2015
quotequote all
Esseesse said:
It never occurs to a government to make the travel expenses 'fair' they could just allow relief on all travel related to going to work. In fact, shouldn't this be the preferred option for a right leaning government (they're not)?
Why?

If everyone claimed home-to-work travel expenses how many more people would HMRC have to employ to audit the figures/process the tax rebates?

mjb1

2,552 posts

158 months

Tuesday 28th April 2015
quotequote all
DeanR32 said:
Last week, I travelled to brighton mon/tues, weds/thurs in Blackfriars, London, and Bromley Friday, all from Southend on Sea. That equates to a bit over 500 miles.

That'll be a kick in the teeth come April time!
You should be fine with that sort of travelling pattern (I hope). I suspect what they are trying to stop is people claiming travel to a 'regular' place of work. At worst, you'd have to pick the place you travel to most and stop claiming for that one.

Eric Mc

121,772 posts

264 months

Tuesday 28th April 2015
quotequote all
No change to legislation required - just proper application of the rules. It probably stems from the recent tax case, Samadian V HMRC -

http://www.law.ox.ac.uk/themes/tax/documents/29.07...

Dr Jekyll

23,820 posts

260 months

Tuesday 28th April 2015
quotequote all
So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.

The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.

oyster

12,577 posts

247 months

Tuesday 28th April 2015
quotequote all
Dr Jekyll said:
So if I get a 6 month contract at a site 200 miles away, it's no longer worthwhile because of the non deductible travel expense, so I'll sit at home paying no tax at all.

The animosity by HMRC towards anyone who could be vaguely described as self employed is verging on the unhinged.
Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.

menousername

2,106 posts

141 months

Tuesday 28th April 2015
quotequote all
oyster said:
Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.
what he is running then?


oyster

12,577 posts

247 months

Tuesday 28th April 2015
quotequote all
menousername said:
oyster said:
Depends if that's your only client?
If it is, I'm not convinced you're actually running a business. Neither, as it seems, is HMRC. Hence the change in the rules.
what he is running then?
A tax avoidance vehicle to operate as a temporary worker. Being a Ltd company one-man band doesn't make you a business. I know, I've done it before.

Nothing wrong about that of course, but at least be grown up enough to accept that tax rules can and do change.

menousername

2,106 posts

141 months

Tuesday 28th April 2015
quotequote all
oyster said:
A tax avoidance vehicle to operate as a temporary worker. Being a Ltd company one-man band doesn't make you a business. I know, I've done it before.

Nothing wrong about that of course, but at least be grown up enough to accept that tax rules can and do change.
or a ltd company focusing 100% efforts on one client for 6 months before moving on to the next... taking any gaps in income on the chin and still paying considerable amounts of income tax, VAT and Corp Tax, which is not "employment"