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Construction workers to lose thousands in tax change – Is this the end of the Umbrella system?

Construction workers employed via umbrella companies are facing a fall in take home pay following George Osborne’s Autumn Statement yesterday.

The Chancellor confirmed an earlier decision to ban workers employed via umbrella companies from receiving tax relief on their expenses.

The statement said: “As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company.

“This change will take effect from 6 April 2016.”

Under the current rules expenses for travel and subsistence form part of a worker’s pay and therefore avoid paying tax and national insurance contributions on this element of their income.

For a worker claiming £50 of expenses a week they will see their pay fall by £22.50 a week or £1,170.00 a year.

The unions believes that expenses form a legitimate part of construction workers’ take home pay as they recompense them for having to travel to temporary sites and often have to work away from home.

See the full article in Construction Enquirer by clicking here  or for more information speak to our Payroll team who can advise you on the changes.