What is Supervision, Direction and Control?

What is Supervision, Direction and Control?

Supervision, Direction and Control (SDC) came into effect on 6th April 2016 to limit the number of contractors who were able to claim travel and subsistence expenses. The legislation was introduced because HMRC believed that many contractors working through umbrella companies were taking advantage of tax relief – when they were operating similarly to employees in permanent positions (and therefore shouldn’t have been eligible). As a general rule of thumb, permanent employees cannot claim tax relief for travel between their home and usual workplace or the cost of everyday subsistence.

The introduction of SDC bought contractors’ ability to claim expenses in line with those of permanent employees if they were found to be subject to Supervision, Direction or Control when carrying out their assignment. It essentially seeks to determine whether you, as a contractor, have the freedom and ability to choose how you carry out your assignment or whether someone has the power or authority to dictate how the work is carried out. The following definitions explain the meaning of Supervision, Direction and Control:


Supervision applies when someone is overseeing the work you do to ensure it is carried out to the required standard. Supervision can also involve helping you, where appropriate, to develop your knowledge or skills.


Direction refers to someone making you carry out your assignment in a certain way by providing you with guidance, advice, or instructions on how the work must be done. Direction also applies when someone coordinates how the work is done, as it is being undertaken.


Control applies when someone is dictating what you do or how you carry out the work. Control also includes someone having the power to move you from one job to another.

How do I determine whether I am subject to Supervision, Direction or Control?

Providing the umbrella company you are using is a reputable and compliant provider – they can offer you support to confirm whether you are subject to Supervision, Direction or Control. You will be asked a series of questions about your role, responsibilities and working environment. You must answer truthfully, and your status will be assessed for each new position you take.

If I am subject to Supervision, Direction and Control can I claim expenses?

If you are subject to Supervision, Direction or Control, you cannot claim tax relief on travel and subsistence expenses. However, there are exceptions. If you are required to travel away from your principal place of work, you may be able to claim travel and subsistence costs as reimbursed expenses – just like a permanent employee working away for a short period.

Why should you still consider using an umbrella company even if you can’t claim expenses?

Even though the ability to claim tax relief on travel and subsistence expenses has been restricted for umbrella company employees, there are still many benefits to working through an umbrella company:

  • You don’t have to worry about IR35 as your tax and National Insurance Contributions are paid to HMRC via the umbrella company’s PAYE system.
  • Public Liability, Employers Liability and Professional Indemnity Insurance are included for free as part of your service.
  • Umbrella companies are the easiest way to get paid as a contractor, and all you need to do is submit your timesheet – the umbrella will do all the hard work for you!
  • Continuity of employment means you can take on various roles simultaneously, and your tax code will not be negatively affected.
  • You will be given access to statutory benefits such as Maternity/Paternity Pay and Sick Pay – just like a permanent employee.
  • You are automatically enrolled into a workplace pension scheme which makes saving for retirement easy.
  • You may be given access to an employee reward scheme and benefit from discounts for online and high street retailers.

Are you interested in registering with an umbrella company?

If you are interested in registering with an FCSA accredited umbrella company, why not look at our top 10 umbrella companies. You can also request a no-obligation consultation from an industry-leading umbrella company for further information about their services.

Click here to see our top 10 umbrella companies!

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