Business Insight – Temporary Workforces 2016

Income Tax: Relief for travel and subsistence

Who is likely to be affected?

  1. Temporary workers who are employed through an employment intermediary*
  2. Businesses with a temporary workforce where the ‘expenses model’ is adopted via an employment intermediary

*such as a recruitment agency, a personal service company or an umbrella company


In the March 2015 Budget, the government announced the intention to remove tax relief for temporary workers on what is effectively ordinary commuting. Following a lengthy consultation, the government have now drafted legislation which is expected to be effective from 6th April 2016.

Direct Impact on workers

A temporary worker will be unable to claim tax relief for home to work travel and subsistence where they:

  • Personally provide services to another person;
  • Are employed through an employment intermediary;
  • Are under (the right of) the supervision, direction or control of any person, in the manner in which they undertake their work.

Whilst the precise impact on any individual is difficult to predict, these workers are likely to be worse off in terms of net pay if they have been used to claiming tax relief in this area.

Indirect Impact on businesses

Businesses are potentially exposed to financial and operational risks, where they operate a temporary workforce via employment intermediaries who operate the ‘expenses model’.

In restricting the tax relief available on travel and subsistence, the legislation is expected to have a material financial impact on the employment intermediary, which the employment intermediary may look to pass on to the end client as an increased cost of the temp worker.

How can we help?

For further information or to discuss the impact for your business, please contact Julie Mordue at NRG on 0191 260 4407 or