The government has moved to prevent umbrella companies from using travel and subsistence expenses in national minimum wage (NMW) calculations.
HM Revenue & Customs and the Department for Business, Innovation and Skills were concerned that a number of service providers were abusing the employee expenses system by offering ‘savings’ while still complying with regulations.
Contract Eye noted that under current legislation, such tax reduction techniques are not permitted.
Speaking to the news provider, Rob Crossland, managing director at Parasol, said the announcement was “positive news all round”.
“It is great news for those umbrella service providers who have worked hard to improve standards within our industry and encourage transparency and best practice,” he stated.
“Before the legislation was introduced at the beginning of the month, you could argue that vulnerable temporary workers were being exploited as a result of some umbrella companies and recruitment agencies using the tax relief on travel and subsistence expenses to top up pay to the NMW level.”
Mr Crossland noted that travel and subsistence is reimbursed as tax relief for temporary workers so they are not out of pocket for taking a job.
“It is vital that the UK temporary workforce is supported with things such as this as they make such an important contribution to the UK economy,” he commented.