Leading a collaborative campaign with 36 of the UK’s largest umbrella firms, the Freelancer and Contractor Services Association (FCSA), today stated that the proposed changes to the temporary workers relief for travel and subsistence will have a detrimental effect on the UK’s flexible workforce and UK plc as a whole. The response comes following last night’s deadline to respond to HMRC’s discussion document “Employment Intermediaries: Temporary workers – relief for travel and subsistence”.

Research carried out by the collaboration representing some 100,000 umbrella employees has revealed that travel and subsistence (T&S) expenses are on average just 10% of turnover, suggesting that tax losses to HMRC are minimal. The research also indicates that umbrella employees claim an average weekly mileage of approximately 181 miles which equates to circa 35 miles a day, almost double the national average of 18.5 miles per day.

Removal of such tax relief would leave many umbrella workers worse off, which could de-incentivise the workforce from undertaking assignments where travel is required. If workers move out of umbrella employment, another unintended consequence could be a tax loss to HMRC.

Julia Kermode, chief executive of FCSA said: “Once again, HMRC’s proposals have ignored the benefits of umbrella employment for workers, agencies and end clients. In the majority of cases, it is a positive choice enabling workers to undertake a number of temporary assignments, whilst having full employment rights, statutory benefits and continuity of employment.

“The removal of T&S relief will force many workers to only consider assignments within a restricted travel area, which in turn will result in a less qualified and less effective workforce. This will damage productivity of end client companies who will have a less qualified workforce to select from; reducing the effectiveness of those businesses or increasing the cost of the flexible workforce to those businesses and, therefore, reducing profits, and damaging the state of the UK economy as a whole.

“At this time policymakers should be nurturing the flexible workforce and continued economic recovery, however the proposals being discussed put both at risk so we would welcome the opportunity to assist HMRC to get it right in the best interests of everyone.”

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