Quite possibly the biggest challenges facing the UK’s professional contracting community in the year ahead derive from the discussion document on IR35 Intermediaries Legislation and the consultation on travel and subsistence.

Putting it straightforwardly, under IR35 legislation, contractors working through self-employed payroll solutions such as umbrella companies are considered employees, not self-employed. For many contractors, this has been a huge relief, as they can work free from any anxiety that they may become subject to an IR35 investigation. But the Chancellor’s plans to abolish tax relief on the travel and subsistence these independent professionals have been able to claim is premised precisely on the basis that, as their technical status is employees, they should not have access to tax reliefs denied to traditional, salaried employees.

This totally overlooks the fact that umbrella company employees do not have the many securities salaried employees take for granted – paid holiday pay, sick pay, maternity leave, etc. It also totally fails to take into account one of the most distinguishing characteristics of these professionals: their flexibility. They will frequently travel far longer distances to and from their temporary workplaces than salaried employees, incurring considerably more travel and subsistence costs as a result.

Commenting on the IR35 intermediaries legislation document and the consultation on travel and subsistence in the magazine of the Association of Accountancy Technicians, AAT member Yvette Ruddock said: “Both of these stem from the inability of HMRC to see the bigger picture as to the benefits of a truly mobile workforce. The changes will cause a serious knock-on effect on the provision of public services, as local and national government budgets are squeezed even more.”

Mobility and the concomitant willingness to travel long distances to temporary workplaces are key features of contracting professionals across the UK. The knock-on effect Ms Ruddock refers to will arise when private and public sector organisations, which rely on skilled independent professionals from the contracting community today as never before, face requests for increased pay rates to compensate for the loss of travel and subsistence relief. The shortfall is estimated to be in the region of £7 billion.