Supervision Direction or Control (SDC)
The introduction of further measures from HMRC from 6th April means that a contractor will only be able to claim travel (including subsistence) if the contract assignment they are working on falls outside Supervision Direction or Control (SDC). This is regardless of how the worker has structured him or herself.
So, if you are working as self employed or via an umbrella company you will need to assess your SDC status before you start your assignment in order to determine whether travel expenses will have tax relief applied to them or not.
SDC – The Detail.
On 6th April 2016, HMRC introduced new legislation that significantly changed how contractor status is assessed—and ultimately how contractors can be paid and what expenses they can claim. This reform was part of a broader effort to tackle perceived tax avoidance in the contracting industry. While HMRC’s intent is to close loopholes, history shows it doesn’t always get it right—IR35 being a prime example. Still, even flawed policies carry serious implications for contractors, agencies, and umbrella companies alike.
As with many HMRC-led initiatives, the rules are far from straightforward. That’s why it’s important to break them down clearly.
Since the legislation came into effect, contractors can only claim travel and subsistence expenses if their current assignment falls outside of Supervision, Direction, or Control (SDC). Crucially, this rule applies regardless of how the contractor operates—whether through a limited company, umbrella company, or another structure. In other words, even limited company contractors lose access to travel expense claims if they are deemed to be under SDC.
Clarification from HMRC
HMRC has clarified that SDC applies specifically to how the work is carried out, not where or when. So, if a contractor is told where to be and what hours to work—but still has full autonomy over how the job is completed—they may still be considered outside SDC, and therefore eligible to claim legitimate travel and subsistence expenses. However, this is often a grey area and needs to be carefully assessed, ideally with professional advice.
Understanding SDC is essential for contractors aiming to remain compliant while optimising their take-home pay.
Example
A good example is an IT developer requested to visit the client site at 9 and leave at 6, being told what software platform to develop on. However, upon arrival at the site the developer receives instruction to design and implement a new piece of software to give a certain result.
The worker goes off and starts working autonomously in creating this software, stopping now and again to check in with a progress report for the client. The developer, being regarded as an expert, is therefore able to undertake the actual work as he or she sees fit.
In this scenario, the worker would be able to convince HMRC that while there is direction and control, there is no SDC in relation to how the work is undertaken.
While this example is a simple one to determine, others may be complicated because HMRC has suggested that SDC can be “implied”, so even if in practice SDC doesn’t happen but the client has the right to exercise SDC then the status would fail in this regard.
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