Posted on 10th February, 2016

Businesses using temporary labour – Are you prepared for the 6th April 2016?

In the 2015 Budget, the government announced its proposal to “restrict tax relief for the cost of home-to-work commuting for those employed through an employment intermediary and working under the supervision, direction or control of any person” (gov.uk – see link below).

Following a lengthy consultation, it now expected that as of the 6th April 2016, the new legislation will be in force to ensure that temporary workers are no longer claiming the tax relief on travel and subsistence (gov.uk – please see 2nd link below). The knock on effect from this legislation may have larger complications than you first thought.

Who will this affect?

  • The temporary worker – will no longer receive the tax rebate they have been accustomed to, meaning they are likely to be financially worse off as a result.
  • Recruiters who use the ‘expenses model’ – are likely to see a reduction in income as some recruiters have built their business around this model
  • The Client – any business who uses temporary workers on their site using the ‘expenses model’.

How might this impact on you and your business?

If your current supplier does adopt this ‘expenses model’, then you need to ask your recruitment partner what their plans are for your business post 6th April 2016?

Some recruiters may have no choice but to increase their charge rates to combat the loss of income from this.

Another serious potential outcome, is the risk of having an unsettled agency workforce. Whilst it is impossible to work out the exact loss for each individual, collectively they will all see a reduction in their take home pay, as they are no longer receiving the tax relief.

How can Central Employment help?

Having been established for almost 40 years, Central have seen the rise of this model and also the inevitable fall ahead. Built on trust, stability and honesty, we are not a recruiter who base their business on the ‘expenses model’ system.

With our team of well trained and experienced consultants, an efficient in-house accounts team as well as boasting a large, strong and loyal client base, we are well placed to guide and advise you through these changes.

Please see below the link for the original proposal back in 2015.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/442693/Employment_Intermediaries_and_Tax_Relief_for_Travel_and_Subsistence_-_Consultation_Document.pdf

And here is the outcome which should be in effect as of the 6th April 2016.

https://www.gov.uk/government/publications/income-tax-employment-intermediaries-and-relief-for-travel-and-subsistence/income-tax-employment-intermediaries-and-relief-for-travel-and-subsistence

If you would like more information, please do not hesitate to give us a call.

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