New rules on claiming travel expenses against income are currently being enacted, and these will reduce the amount that some people can claim.
Before the new rules come into effect, which eventually will be the start of the current tax year, then people working through intermediaries could treat the client’s premises as a temporary workplace. Accordingly, they could claim the cost of travel to and from those premises against income for tax purposes. The new rules are designed to treat the client’s premises as a permanent workplace where one of two conditions are met:
- IR35 applies, which is when a worker would be treated as an employee of the client were it not for the introduction of an intermediary into the chain; or
- Where there is supervision, direction or control over the worker by the client, which is a much looser but wider application
The effect of these changes is that travel and subsistence costs will no longer be a deductible expense if you work through an employment intermediary. However, the rules will not preclude a claim if you are travelling to a genuinely temporary workplace.
As currently drafted, HMRC consider that the new rules are flawed in that they would only apply in the first instance. However, we must assume that this flaw is corrected before the draft legislation becomes law.