PSC contractors’ travel and subsistence changes come in today
It has been one of the main topics of discussion amongst contractors over recent months, but today is the day that the new travel and subsistence regulations come into force for those contractors who work through personal service companies. Despite pleas from a number of bodies representing contractors to reconsider the changes, the government has gone ahead with measures which will take effect as of today, the 6th April.
Contractors who were previously able to claim tax relief on their travel and subsistence costs of travelling from home to work will no longer be able to, in an attempt to rectify a perceived unfairness between those who work for themselves and those who are employed.
Workers who operate through a PSC will only be affected by this legislation if they also fall outside IR35, however many people are concerned that if they have been working outside IR35 and are later found to be inside IR35, the amount they will owe will be considerably higher when travel and subsistence expenses are included.
This could be a significant change for some contractors, and although there has been ample warning about the impending changes to the way expenses will work, the fact that umbrella companies will not be able to process travel and subsistence claims as of today could cause problems. Those who have unclaimed expenses from before the legislation took effect will have to use the self-assessment system in order to claim the previous rates of tax relief on the sums involved.
For those who are lucky enough to have clients who are prepared to pay chargeable expenses to travel between their homes and their place of work, contractors should note that these sums will now be subject to both income tax and National Insurance Contributions. Other chargeable expenses can be paid without incurring tax or NICs so long as they reflect actual expenditure incurred.
Contractors who want to know about the ins and outs of working for themselves could benefit from our range of useful resources, including our guides to contractor expenses, our information about operating as a limited company and our take-home pay calculator.
Independent professionals who want to know more about how to structure their finances can benefit from the experience and expertise of our friendly team of accountants. Our contractor-friendly packages are designed to provide personalised service at an affordable price, so call today on 01442 275789 or email firstname.lastname@example.org for more information.