Employment Intermediaries – Travel and Subsistence (Part 3)

It may have been missed by most, but the consultation on Travel and Subsistence is also proposing a change for individuals supplied by agencies on sites governed by Working Rule Agreements. At Present (Source EIM71319)

Where Construction Industry Workers are supplied by agencies to work on sites, and they are employed within the terms of a working rule agreement, the payment of travel and lodging allowances may be made in terms with the relevant agreement. This means that travel and lodge allowance up to a stated rate can be paid free of Income Tax and National Insurance. Consultation Says (Page 22)

If a worker is employed through an employment intermediary and subject to supervision, direction or control they will no longer be due tax relief on their home to work travel and subsistence. Where that worker is employed in the construction and allied sectors under a Working Rule Agreement, then the special taxation procedures that HMRC has agreed that all travel and lodging allowance paid under such agreements to be paid tax and NICS free will not apply.

Tax Relief will still be due on a case by case basis where a worker can demonstrate that they are entitled to relief under the statutory rule. In English then when the allowances are paid in future, assuming the legislation goes through as is, then PAYE and NIC will be applied at source.

Many agencies provide workers to Contractors that work on sites governed by WRA and it seems that HMRC, possibly with influence from the Unions, don’t want that to continue as you can’t see a worker on a WRA site accepting that his Lodge and Travel is taxed and subject to employees NIC, but a direct employee of the contractors isn’t. Also will contractors being willing to pay an extra 13.8% on the Lodge and Travel that it can pay a direct employee even if they are on a Fixed Term contract. ECIA Member Agencies may wish to bring this to the ECIA’s attention.

Article wrote by Paul Hughes, I-Paye http://www.i-paye.com/

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