Flexible labour now plays an important role in the UK economy and it is necessary that the tax system recognises the different ways that individuals are working, while at the same time making sure nobody is given an unfair advantage. I appreciate your concerns about the impact of this proposal on your own business.
As announced at March Budget 2015, the Government will introduce legislation to restrict tax relief for home to work travel and subsistence expenses for workers engaged through an employment intermediary. This will bring the rules into line with those that apply to employees. I support the Government's decision to bring people employed through such companies into line with others, in order to ensure fairness in the system. Other workers are not generally eligible for tax relief on home-to-work travel and subsistence expenses.
People can also use intermediaries to disguise what would otherwise be employment income. The IR35 legislation seeks to ensure that what is properly employment income is taxed as such and tackles tax and National Insurance avoidance through the use of intermediaries.
The Government recognises that many individuals choose to work through their own limited companies and appreciates the positive contribution to the economy of those who choose to work for themselves. However, the Government is committed to tackling tax avoidance and evasion at all levels to ensure everyone pays the right tax at the right time. Avoidance (and evasion) damages the effectiveness of the tax system and imposes additional costs on all taxpayers.