Hundreds of thousands of workers recieve financial kick in the teeth as tax free expenses axed

Hundreds of thousands of workers, many of whom work in construction, face a financial kick in the teeth, due to tax changes on expenses, which come into effect today (April 6th 2016) the start of the new financial year.

The Government has introduced changes to remove workers employed through an employment intermediary (an umbrella company, personal service company or employment agency) from claiming tax relief on travel, food and overnight accommodation.

Construction union UCATT estimates that workers operating via umbrella companies will on average lose £1,000 a year and in one case the union has seen a worker faces seeing their take home pay cut by £3,369 a year.

The change in the expenses rules will also severely affect workers operating via employment agencies who are paid under the terms and conditions of an industrial agreement such as the Construction Industry Joint Council (CIJC) Working Rule Agreement. UCATT estimates these workers, who receive travel expenses will be £600-£900 a year worse off.

The Treasury estimates the changes will bring in an additional £150 million a year in revenue.

Brian Rye, Acting General Secretary of UCATT, said: “This is an absolute kick in the teeth for construction workers who are already being forced to work under the exploitative yoke of umbrella companies and employment agencies. All of the additional costs will be met by the workers and the employers businesses will be entirely unaffected.

UCATT have led the campaign for the complete abolition of the umbrella companies and the case against them is found in UCATT’s document The Umbrella Company Con-Trick. Rather than outlaw umbrella companies the Chancellor has instead closed the one tiny loophole which meant that umbrella company workers were not exposed to an effective tax rate of 45% (income tax, employer’s national insurance contributions and employee’s national insurance contributions) on all eligible earnings.

The Government’s crackdown will mean that workers operating on the CIJC, working side by side will be taxed differently depending whether they are directly employed by a company or via an agency.

Brian Rye, added: “Once again this shows how this Conservative Government are making workers suffer, while giving a free pass to their friends in business.”

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