As a result of the Autumn Statement 2015, IR35 remains unchanged. However, both umbrella and limited company contractors using personal service companies which fall inside IR35 will have their travel and subsistence tax relief restricted.
Chancellor, George Osborne, mentioned in his Autumn Statement speech that broader tax avoidance measures are unlikely to affect many contractors along with many measures that could in theory benefit contractors and freelancers.
The Spending Review and Autumn Statement 2015 says:
“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. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.“
This was confirmation that the government would restrict tax relief on travel and subsistence expenses and was also the news that few contractors operating through an umbrella company or inside IR35 were pleased to hear. Those contractors operating through a personal service company who fall outside IR35 will be unaffected.
Dave Chaplin of Contractor Calculator, highlighted:
“The restrictions on expenses tax relief for some contractors is bad news and will impact negatively on the UK’s contingent workforce flexibility but it was expected,”
“However, despite the media storm of the last few weeks, there has been no action yet over reforming IR35. This, I believe, will change and we can expect further measures directly from HMRC in the coming weeks.”
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