April 2016 has seen the introduction of legislation that will impact all employers that use temporary agency workforces. What do you need to know?
- Previous Umbrella schemes will no longer be legal in the majority of cases. The Umbrella Company acted as an employment intermediary and using its payroll methodology, allowed the temporary worker to claim expenses for travel and subsistence (T&S) to a temporary place of work. In turn, this reduced worker taxable pay value, meaning less tax paid overall and therefore greater take-home pay compared to the standard PAYE method.
- Agency workers who are under the ‘Supervision, Direction OR Control’ of the end user, will not be allowed to claim tax relief on expenses such as their ordinary commute from home to work or their food costs during the working day.
- HMRC will determine a temporary worker’s right to claim the T&S allowance by testing whether they are under any form of supervision, direction or control in the manner in which they carry out their work. If HMRC decide that full tax and contributions should have been paid for or by the temp worker, it will be the worker, the umbrella intermediary and / or the recruitment company that will be liable for the shortfall.
If you regularly use large volumes of temporary staff and they are under your supervision, direction or control on how they perform their duties, you may want to seek some clarity from your agency on the pay scheme they are operating for your temps, just for your own peace of mind!
Should you have anything you would like to discuss further about this legislative change or the services that Grafton can provide, please contact Pete Feldman (Managing Director) at email@example.com or Claire Dooher (Regional Director) at firstname.lastname@example.org.