Tax relief for travel and subsistence, R&D advanced assurance, Payment of SA tax

The Autumn
Statement contained little to concern small businesses in the near
future. The proposed change to tax relief for travel and subsistence
costs will be relatively limited, as we explain below. There is a new
R&D advanced assurance procedure which small companies should know
about, and we revisit the issue of paying SA tax in January, because it
is so important.

This is an
extract from our topical tax tips newsletter dated 3 December 2015
(5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Tax relief for travel and subsistence


In our newsletter
on 15 September 2015 we outlined the proposed changes to tax relief for
travel and subsistence costs. The Government says a restriction on this
relief is needed to block abuse of the rules by a minority of employment
agencies and umbrella companies, and personal service companies were
set to be caught in the cross fire.


 


The good news is
the Government listened to responses to the consultation paper, and has
decided to restrict tax relief for travel and subsistence expenses only
for workers engaged through employment agencies, such as an umbrella
companies. This means those temporary workers won’t be able to claim
expenses for travelling to work, and won’t be due a lunch allowance
either. This change will take effect from 6 April 2016.


 


Individuals who
contract through their own personal service companies may be caught by
this change in the tax rules, but only where the contract they perform
falls under the IR35 rules. Thus if IR35 doesn’t apply, the contractor
can carry on as before, claiming a reimbursement of travel and lunch
costs from his own company.


 


This will be a big
relief to many contractors, as the IR35 rules rarely apply to genuine
contractors who are in business on their own account, and who can
provide substitutes to complete their contracts. There is a lot more to
IR35 that those two conditions. Our employment tax experts can help you
advise clients on that complex piece of legislation.


 


You should also
advise clients that the IR35 rules are under review and may be tightened
up from April 2016 or from a later date.

This is an
extract from our topical tax tips newsletter dated
3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The
full newsletter contained links to related source material for this
story and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.
You can obtain future issues by registering here>>>