An HMRC Policy Document released just before Christmas reveals a "gross underestimation" on how much UK Government tax reforms will cost construction workers, according to UCATT.

The union said the publication stated workers will be £360 a year worse off under the new rules.

The new reforms will tax construction workers working for umbrella companies on their travel expenses, with HMRC's own estimations suggesting that the change "is not expected to have any significant economic impact."

However, UCATT said the change will result in employees losing over £3,000 per year.

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The union cites a recent case study which shows an average construction worker under an umbrella company will have £144 of weekly travel expenses. Under the new law, these expenses will be taxed at 45% (20% income tax, plus both employees and employers NIC).

This results in a loss of £64.80 per week, totalling £3,369 a year.

The document estimates 430,000 workers employed by umbrella companies or engaged by "employment intermediaries" will pay more tax.

Brian Rye, National Secretary of UCATT, said: "Almost half a million workers will be significantly worse off after April, when this measure is introduced.

"For those that have to travel to several sites for their work the hit will be massive. Meanwhile umbrella companies will be allowed to continue their tax dodging ways by this Tory Government.

"This Government is government by the rich, for the rich – and wants the rest of us pay. We’re damn sure George Osborne’s travel expenses aren’t taxed."

(LM/MH)