Tax relief for travel and subsistence, R&D advanced assurance, Payment of SA tax

The Autumn Statement contained little to concern small businesses in the near future. The proposed change to tax relief for travel and subsistence costs will be relatively limited, as we explain below. There is a new R&D advanced assurance procedure which small companies should know about, and we revisit the issue of paying SA tax in January, because it is so important.

This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Tax relief for travel and subsistence
In our newsletter on 15 September 2015 we outlined the proposed changes to tax relief for travel and subsistence costs. The Government says a restriction on this relief is needed to block abuse of the rules by a minority of employment agencies and umbrella companies, and personal service companies were set to be caught in the cross fire.
 
The good news is the Government listened to responses to the consultation paper, and has decided to restrict tax relief for travel and subsistence expenses only for workers engaged through employment agencies, such as an umbrella companies. This means those temporary workers won't be able to claim expenses for travelling to work, and won't be due a lunch allowance either. This change will take effect from 6 April 2016.
 
Individuals who contract through their own personal service companies may be caught by this change in the tax rules, but only where the contract they perform falls under the IR35 rules. Thus if IR35 doesn't apply, the contractor can carry on as before, claiming a reimbursement of travel and lunch costs from his own company.
 
This will be a big relief to many contractors, as the IR35 rules rarely apply to genuine contractors who are in business on their own account, and who can provide substitutes to complete their contracts. There is a lot more to IR35 that those two conditions. Our employment tax experts can help you advise clients on that complex piece of legislation.
 
You should also advise clients that the IR35 rules are under review and may be tightened up from April 2016 or from a later date.

This is an extract from our topical tax tips newsletter dated 3 December 2015 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>