PSC Contractors Spared
There was a huge sig of relief for PSC contractors spared by Chancellor George Osborne in gis Autumns Statement today.
That doesn’t apply to umbrella company contractors, though.
The Chancellor confirmed, today, that tax relief for travel and subsistence was going to be taken away from umbrella company contractors from April.
That was expected.
It was also expected that he would take it away from personal service company contractors too,
Indeed he said as much a few months back in July.
Travel and Subsistence Expenses
However, he changed his mind today after consultation (or lobbying if you like).
He is only going to take away tax relief from travel and subsistence expenses for those PSC contractors who are caught by the Intermediaries Legislation, known to you, and I, as IR35.
That seems a bit odd as first as contractors would not have limited companies if they were caught by IR35.
They would either pay the IR35 tax (very few of them in practice) or join an umbrella company.
He must mean that any contractors who use a personal service company but who are found to be caught by IR35 will not be able to offset travel and subsistence against tax.
Accountants and PSC Owners
There’s still the Finance Bill on December 9th which will contain more details.
So, those PSC Contractors spared by Chancellor Osborne will still be a bit nervous till they hear what the detail is in that.
However it does look like a good day for personal service company contractors and their Accountants.
Umbrella Company Owners
The same can’t be said for umbrella company owners and umbrella company contractors.
Those contractors will now be looking at their options now that they will not be able to claim their travel and subsistence against tax.
It could well be that the amount of money that they are able to offset against tax will be less than the monthly fees that they have to pay their umbrella company for basically paying them each week or month.
They are sure to be weighing up their options.