HM Treasury has launched a new consultation document which will look at potential abuse of the tax relief rules on travel by temporary workers using "overarching" contracts.
The cost of travel between home and work is normally regarded as a personal expense, putting an individual in the position to do his job, rather than an expense incurred in performing his duties. Travel between home and a permanent workplace does not qualify for tax relief. However, a distinction is made for temporary workplaces where the worker goes to perform a task of limited duration, or for a temporary purpose. Tax relief is given for travel between home and temporary workplaces, but this depends on the workplace being a temporary one within the rules, not on whether the worker is on a temporary contract.
Overarching employment contracts are often used by umbrella companies and employment agencies to change what would be a series of permanent workplaces (for which no tax relief is due for travel between home and work) into temporary workplaces (for which relief is due).
The consultation paper invites views from stakeholders over the summer with final comments by 13 October 2008.
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