Reports of imminent changes to IR35 (tax legislation designed to tax ‘disguised employment’ at a rate similar to employment) were circulated widely in the lead-up to yesterday’s Autumn Statement. Many feared that, if the Chancellor were to tighten the rules as rumoured, contractors who provide services through a personal service company, would in effect be required to be paid through payroll if engaged by a business for longer than a month or two. This was due to the proposed introduction of debt transfer provisions for unpaid PAYE to end users and/or intermediaries where a right of supervision, direction or control existed.
There will be a collective sigh of relief, then, that no changes have in fact been made to IR35 by the Autumn Statement documents released yesterday. It remains, however, a case of watch this space as the issue may well be revisited in the next 12 months.
Travel and subsistence
Nevertheless, certain changes to the tax relief regime for travel and subsistence expenses of contractors engaged through umbrellas and personal service companies have been announced. The Government consulted on this earlier this year, and these have been introduced as expected. As a result, from 6 April 2016 relief will be restricted for contractors where they are subject to the right of supervision, direction or control within the contractual chain. Draft legislation is expected in December.