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The impact of T&S legislation and new IR35 rules in public sector What is the impact of travel and subsistence legislation? What do the current salary sacrifice rules mean for contractors? From April 2016, contractors providing their services via an employment intermediary, such as a recruitment agency, and who fall under the supervision, direction and control of the end-user are very restricted in terms of what tax-free expenses they can claim. The salary sacrifice rule removes the ability for contractors to vary their weekly salary depending on the amount of expenses claimed. Authorised Mileage Allowance Payments (AMAPs) fall outside these rules and can be paid tax-free instead of salary as part of a weekly pay calculation. Contractors who are eligible to claim other tax free expenses can do so via their annual self-assessment tax return. Contractors will still be able to claim tax-free expenses if: 1. They provide their services from more than one workplace within the same assignment. If so, they are able to claim mileage (Approved Mileage Allowance Payments/AMAPs) from home to secondary workplaces/or between workplaces. This is identified as ‘travel in the performance of their duties’. 2. They are self-employed and do not fall under the supervision, direction or control of their end-user client. What does supervision, direction or control (SDC) mean? A contractor providing their services via an employment intermediary is deemed to be under supervision, direction or control (SDC) when the end-user client directs the manner in which they provide those services – i.e. the end-user/client tells the contractor how to perform their duties. Our products provide options whether your contractors fall under the supervision, direction and control of the end-user, or not. Our SDC test will determine your contractors' SDC status - so you don’t have to. How can I be sure your products and processes are compliant? Our products and processes have been carefully designed under the supervision of one of the UK’s leading tax and employment law advisory bodies. Our systems and procedures have been and will continue to be audited by HMRC. How are contractors affected by changes to IR35 rules in the public sector? From April 2017, limited co/PSC contractors working in the public sector are subject to new rules (known as Off-payroll working in the public sector) whereby their agency or end-user is charged with determining their IR35 status. If the contractor is deemed to be caught by IR35 the agency or end-user would be responsible for applying the deduction of PAYE tax and National Insurance (employers and employees) contributions. In addition, the 5% weekly administration allowance has been removed for contractors in the public sector and the benefit of the VAT Flat Rate Scheme almost completely withdrawn for business with limited costs (i.e. spending less than 2% of their turnover on goods and services). Last updated March 2017