The Treasury has published a discussion paper on tax relief for travel expenses, looking in particular at temporary workers and overarching contracts.
The consultation is published in the light of the Government's concern, noted in the 2008 Budget, 'at the growing use of structures such as “umbrella companies” or overarching contracts of employment with employment businesses, to obtain tax relief for travel expenses that would not be available to other workers'.
The Government went on to say that it would monitor the use of these structures and, if necessary, consider action in the future.
In essence, the consultation document is looking at the expenses allowed for travel to a temporary workplace.
The Treasury claims that evidence shows widespread abuse of the travel expenses rules by umbrella companies, etc.
The department has suggested two possible solutions:
- allow the existing arrangements to continue but introduce legislation to tackle non-compliance; or
- remove entitlement to tax relief for travel expenses for umbrella companies and employment agencies using overarching employment contracts.
Comments on the points raised in the consultation should be sent by 13 October 2008 to Lucy Cowan, Travel expenses consultation, Personal Tax Team, HM Treasury, 2/SE,1 Horse Guards Road, London SW1A 2HQ, or emailed to travelconsultation@hm-treasury.x.gsi.gov.uk.
