We have a fan in the House of Lords

[Boo]

Lord Palmer of Childs is asking the Government to rescind an addition to the Finance Bill which means that contractors would have to claim expenses annually via SA Second Reading (and remaining stages): 10 Nov 2015: House of Lords debates - TheyWorkForYou

So that's a grand total of 2 fans then ? The other being the one the tulipe hits...

Boo

[LisaContractorUmbrella]

This was a result of HMRC doing away with dispensations for everyone - the rest of the business world can decide what's an allowable expense and what isn't but umbrella companies can't so contractors will have to claim through SA. Mind you as pretty much no-one will be eligible for relief on T&S from next year it's all a bit moot really.

[yakitoo]

This appears to have a rather unpleasant odour coming from it.

[matzie]

Perhaps I've just missed it in the constant influx of legislation and proposals inimical to contracting, but I didn't know about this issue:

I refer of course to Section 289A of the March 2015 Act relating to exemption for paid or reimbursed expenses. The addition of subsection (5)(b), which contains an innocuous, convoluted phrase, will affect about 400,000 contractors by delaying receipt of their properly incurred tax relief. Whereas at present the tax relief is given at source, it will now have to be claimed after the end of the tax year. Many contractors will fail to do so; many will need to employ an accountant to sort it out; and—just imagine—the overworked and understaffed HMRC will need to process an additional 400,000 tax returns.

I read the Act and I'm not sure if 5b, which says that relief is not available if:

the amount of other general earnings or specific employment income received by the employee depends on the amount of the payment or reimbursement.

will affect PSCs directly though, who are unlikely to base their salary decisions on the amount of expenses claimed... but I can see how bad this would be for Umbrellas and those who use them. I wonder if the government has realised what the net effect of destroying umbrella companies will be?!

While looking into this I found this article from taxation.co.uk which seems helpful:

a last-minute change to the legislation – the addition of subsection 5(b) into s 289A – has never been publicised and it appears that even knowledgeable and specialist practitioners are unaware of it

[LisaContractorUmbrella]

Lord Palmer of Childs is asking the Government to rescind an addition to the Finance Bill which means that contractors would have to claim expenses annually via SA Second Reading (and remaining stages): 10 Nov 2015: House of Lords debates - TheyWorkForYou