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