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Research reveals confusion about new T&S rules

by Susie Hughes at 15:35 25/02/16 (News on Business)

Research has revealed that only 35 per cent of UK hirers are fully conversant with the pending travel and subsistence (T&S) regulations.

The research, conducted over the last two months by a collaboration of trade and professional bodies, the FCSA, CIPD, CBI and REC, sought to gauge the levels of awareness of the new tax legislation amongst end hirers, how they would respond and how the new rules would impact their hiring decisions when the new regulations come into effect in April. Nearly 500 hirers responded to the research across all sectors and disciplines. Under the clampdown on travel and subsistence allowances, anyone working through an intermediary such as an umbrella company or who is under the supervision, direction or control (SDC) of an employer will no longer be able to claim tax relief for expenses incurred getting to the place of work. (See: Details of plans to scrap tax relief for contractors emerge - Shout99, Dec 15) Other key findings revealed that: More than 90 per cent of organisations that hire freelancers and contractors will not be compensating all workers for their financial loss that changes to T&S tax offset rules will present. This comes despite the Government suggesting that it 'expects business to pay a wage sufficient to attract workers without any special tax subsidy being necessary'. Nearly 80 per cent of end hirers who plan to keep rates static believe that their decision will have a negative impact on workforce flexibility, competitiveness and their ability to attract and retain staff. Thirty-eight per cent of operational teams claiming to be fully up to speed compared to only 14 per cent of HR respondents. In essence, the research revealed that in 95 per cent of hirers engaging umbrella employees and PSCs, all or some of these individuals will be impacted. For the 71 per cent of end-hirers who have already determined which roles will be subject to supervision, direction or control (SDC), thereby removing the potential for those workers to offset T&S expenses against tax, more than a quarter know that this will be the case and three in 10 believe it will be the case for most people. Just five per cent think that all workers fall outside SDC, leaving 39 per cent truly determining the nature of the working relationship on a case-by-case basis Advertisement With less than two months to go before the legislation takes effect, one third of respondents are yet to determine what they will do for their umbrella and PSC workers. Those who understand what the T&S rules mean believe that the legislation will reduce their organisations’ flexibility significantly and will also reduce the quality of available contractors to call upon. Fourteen per cent of hirers said that they will use fewer umbrella employees/PSCs as a result of the changes. Julia Kermode, CEO of trade association, the Freelancer and Contractor Services Association, said: “It is clear that, whilst the UK overnment believes in the principle of hirers paying ‘a wage sufficient to attract workers without any special tax subsidy being necessary’, UK plc does not currently have the bandwidth to absorb the significant cost implications of this legislative ruling. “As individuals will be impacted in 95 per cent of UK workplaces that use umbrella employees and/or PSCs, the findings of this research should give employers and Government alike notable cause for concern. “We will present a report of our findings to David Gauke MP, Financial Secretary to the Treasury, the Minister responsible for the reforms. We will also be raising awareness of this important evidence with other MPs and key policymakers." Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2016

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