Workers operating within ‘umbrella companies’ will still be able to claim tax relief on travel expenses after the government decided against a clampdown.

The taxman has decided to hold off on plans to change the rules by which temporary workers using umbrella company structures claim tax relief on travel expenses. But HM Revenue & Customs will ‘refocus’ its efforts on the area to ensure compliance. If this does not improve, HMRC will revisit rule change plans at a later date.

Anne Redston, visiting professor at Kings College, London, said changing the rules would have been a ‘step too far’ for HMRC. ‘It would be too difficult to identify an umbrella company.’

In an earlier consultation document the Treasury said there was currently £300m tax relief for travel claimed each year.

But Redston said it was unclear how much of that was avoidance and poor compliance.