Travel & Subsistence Crackdown to Cost IT Contractors £6,000

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Travel and Subsistence Expenses
Travel and Subsistence Expenses of contractors attacked by Government

Travel & Subsistence Crackdown by Conservative Government

There will be a travel & subsistence crackdown by the Chancellor on umbrella company contractors.

The Conservative Government has flown a kite this week. They placed in the Guardian and Daily Mail a story which says that the Chancellor is intending to make all contractors who work at a company for more than a month go on the payroll of that company.

That will abolish IT Contracting as we know it. Companies won’t want to take contractors onto their books.

According to contractors group IPSE, contractors businesses will be destroyed if this happens.

We will have to see in the Autumn Statement later this month precisely what that entails.

David Cameron whose father and father-in-law are tax avoiders
David Cameron, scourge of contractors, whose father and father-in-law are tax avoiders

Travel and Subsistence Expenses Attack

However, we already know, from his Budget Statement, that Chancellor Osborne, and the Conservative Party, intend to stop both umbrella company contractors and personal service company contractors from claiming travel & subsistence against tax.

Trade body, Prism, have done an analysis of the effect of this on the pockets of various freelancers in the UK.

They reckon that it will cost freelance supply teachers $3,252 a year.

It will cost frelance supply teachers £4,650 a year.

This will cost contructtion workers an average of £6,084 a year.

IT Contractor Take Home Pay Cut

The biggest hit is on IT contractors who lose £128 a week or £6,656 a year.

That’s a huge hit. That’s even if the Conservative Government’s recent initiative on putting contractors on the payroll comes to nothing.

The Government see all contractors as tax avoiders.

Chancellor George Osborne - tax avoider
Chancellor George Osborne – a tax avoider too

Prism is campaigning to stop the Conservative Government from taking away the right of the flexible freelance workforce to be able to claim travel & subsistence expenses when working away from their home office.

The Yes2T&S canpaign, launched two weeks ago,  aims at the MPs of contractors who will be affected by this change.

Contractors Taxed Like Permanent Employees

There are 1.6m freelancers in the UK. They do not get the benefits of permanent employees, or the job security that they have. However, they will pay as much tax as them in the future if the Conservatives implement this. They say they shall.

Said Crawford Temple, CEO of PRISM: “These figures lay bare the huge impact this stealth tax raid by the Chancellor will have, affecting up to 1.6m contractors just as the country gets back on its feet.

“The overnight drop in take home pay will either mean there are fewer workers willing to travel or rates of pay will have to go up. That burden will be borne by public and private sector employers which will force prices up and deliver worse value for money for the taxpayer.”

Costs Contractors 20% of Take Home Pay

Prism estimate that the travel & subsistence hit will cost contractors 20% of their take home pay.

If companies had to plug the gap by increasing contract rates it would cost them £7bn.

To join the Yes2T&S campaign click on  www.prism.contractors/yes2tands.

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1 COMMENT

  1. I am thinking about 600 plus people who all working in Westminster, who are directed how to work, a lot of them have 2nd homes, written off againast tax. They know that they are going to be doing the same job for five years.

    Q. Why does the new changes about traveling not effect them?
    Q. Why does the two year travel rule not apply to them?
    D.

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