Julia Kermode, CEO of the FCSA said: “As usual the devil was in the detail of the Chancellor’s Spending Review today and it would appear that the Government will go ahead with its plans to abolish T&S tax relief from April 2016 for temporary workers engaged through an intermediary. This will apply to workers engaged through an umbrella or personal service company where IR35 applies. It seems that those outside of IR35 will not be penalised, although we note that further change on the employment intermediaries legislation is coming following Mr Osborne’s statement that he will look into “disguised remuneration” – and we will continue to play an active role influencing such policy discussions.
In particular, the health sector faces a double-whammy if their pay caps are combined with losing tax relief. Research published this week by Aldwych Partners (Price Caps for Agency Staff: a Research Report) indicates that around 94% locum doctors and 88% allied health professionals currently operate within a structure that gives them eligibility for relief on their travel expenses. Furthermore, they are often travelling significant distances to undertake their assignments – 59% of nurses and 55% of allied health professionals on short-term assignments currently travel over 1 hour to work. The research shows that following the cap on pay the numbers willing to travel in excess of 1 hour reduces to 9% of nurses and 7.5% allied health professionals. It seems inevitable that these numbers will reduce even further if they also face losing tax relief on travel expenses.
Government must start to appreciate the value of the contingent workforce, indeed the very workers who are propping up the UK economy. George Osborne says he ‘chooses to build’ and is ‘determined to boost the Northern Powerhouse’ but new homes and infrastructure projects are all reliant on the contingent workforce and cuts to travel and subsistence will have a damaging effect on these projects.