The Chancellor confirmed an earlier decision to ban workers employed via umbrella companies from receiving tax relief on their expenses.

The statement said: “As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company.

“This change will take effect from 6 April 2016.”

Under the current rules expenses for travel and subsistence form part of a worker’s pay and therefore avoid paying tax and national insurance contributions on this element of their income.

For a worker claiming £50 of expenses a week they will see their pay fall by £22.50 a week or £1,170.00 a year.

Brian Rye, Acting General Secretary of UCATT, said: “This is a kick in the teeth for workers who are already losing thousands of pounds a year by being forced to work via an umbrella company.”

The unions believes that expenses form a legitimate part of construction workers’ take home pay as they recompense them for having to travel to temporary sites and often have to work away from home.