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The confusion that was surrounding the wording in the Autumn Statement documents regarding restrictions to be imposed on tax relief for Contractor Travel and Subsistence claims has now been clarified by HMRC.
The initial confusion was compounded by the fact that George Osborne made no mention of any proposed changes during his speech.
Once the dust has settled and the analysis over and done with, the Autumn Statement delivered by Chancellor George Osborne yesterday may well be looked back on as positive for business.
With the economy in good shape, and the Chancellor all too aware that he will be challenging a party leadership contest in the not too distant future, it looks as though he is trying to shirk the unpopular public image of ‘George the Cutter’.
Our interpretation of the restriction on Travel & Subsistence expenses is that it will only apply to contractors working through their own limited company that are caught by IR35 legislation.
However, other commentators in the industry interpret the statement made to be that restrictions will apply to umbrella company workers and PSC’s caught by IR35 and that potentially there may be a Supervision, Direction and Control type test to see if a worker is entitled i.e. that they are truly self-employed.
The Autumn Statement speech has now finished and there was no mention of contractors, freelancers, umbrella companies or personal service companies.
Full text available at: https://www.gov.uk/government/speeches/chancellor-george-osbornes-spending-review-and-autumn-statement-2015-speech
The full Autumn Statement document is currently being analysed by our in-house tax experts to see if anything else would affect our industry.
An index measuring contractor confidence has dropped significantly in the third quarter of 2015, with government attitudes towards contracting the apparent root cause.
The Freelancer Confidence Index which is conducted by The Association of Independent Professionals and the Self Employed (IPSE) has recorded a significant decline in the latter parts of 2015.
The index score measuring contractor’s business prospects has dropped negative for the first time ever.
A shock employment law regulation which could be announced at the Autumn Statement on the 25th of November has been heavily criticised by large portions of the contracting community. Currently it is unclear when it will come in, if at all.
The rumoured policy proposal, which many insist is still only a rumour, would mean that contractors using personal service companies like Umbrella.co.uk would be obliged to move onto a client’s PAYE system if their contract ran longer than one month.
HMRC, the UK’s tax authority, has announced that 137 local tax offices are to be closed and replaced with 13 regional tax centres. The announcement which comes after reports emerged that taxman failures were costing the public purse. It has stoked fears of job losses and short term disruption to the tax system.
In the House of Lords Grand Committee meeting on 10th November 2015 Lord Palmer speaks out about the rushed amendments to the March Finance Bill 2015 and the good work umbrella companies do in aiding the efficient collecting of taxes.
The key points raised by Lord Palmer were:
“The March 2015 Finance Bill—not the Bill before us today—had a clause added to it without consultation, and was enacted two days after that addition was made. The Government did not notify the umbrella company sector that it would be making those changes at that late stage. In speaking today, I am seeking that the Government should think again with the current Bill and repeal the section in question.
The Chancellor. George Osborne, will deliver his Autumn Statement on 25th November 2015 and rumours have just been leaked that he is considering sweeping changes that will adversely affect UK contractors.
The Autumn Statement is in effect a mini budget.
Contractor One Month Rule
Over the weekend there were various reported leaks that The Chancellor is considering a new rule that would mean contractors who take a contract longer than one month would have to be paid PAYE by their end client after just one month. It is unclear if it would be from day 1 if it was known at the start that the contract would be for more than one month.
It's week 1 and some of the baby faced Umbrella bros are finding hair growth more challenging than others! The bros 'salute their most folically challenged friend Dan'.
"A 3 week head start and a touch of my Mum's mascara have got me in line with everyone else" Dan Bird. We've given him a helping hand in this week's photo.
If you are a contractor or freelancer working in the UK you may have been pitched the tax benefits of paying yourself through an Employee Benefit Trust (EBT).
With an EBT contractors receive just a basic wage equivalent to the Statutory National Minimum Wage. The remainder of their gross earnings go into an EBT, usually offshore. The company making the payment also claims Corporation Tax relief on these payments. The trust then “loans” back the money to the contractor and this loan is not therefore taxable. The loan is never repaid. In effect you receive your wages tax free.
EBT’s have been used from such professions as IT Contractors to Premier League Footballers.
The Freelancer and Contractor Services Association (FCSA) has accused the government of valuing councillors over contractors, calling hypocrisy on government plans to provide travel-to-work tax relief to local councillors at the same time as talking of scrapping them for temporary workers.
At a time when the review into contractor travel and subsistence (T&S) tax-relief is ongoing, it has emerged that MPs want to award councillors a similar package of tax savings on their travel.
The government changes will exempt councillor travel expenses from income tax and National Insurance. This applies to journeys made between the councillor’s home and permanent workplace.
Umbrella contractors, like those employed by Umbrella.co.uk, had a number of reasons to smile yesterday as the Chancellor George Osborne delivered his Autumn Statement address to the House of Commons.
Following months of speculation about the impact of tax changes for contractors, the statement was relatively mild compared to some of the expectations in the contractor community.
The biggest relief for contractors employed by umbrella companies is that on first reading it appears that they will still be able to claim tax relief on their Travel and Subsistence expenses.
Our interpretation of the restriction on Travel & Subsistence expenses is that it will only apply to contractors working through their own limited company that are caught by IR35 legislation.
We have scoured the document in-house at Umbrella.co.uk and can only find the below statement that relates to contractors and travel and subsistence.
“Employment intermediaries and tax relief for travel and subsistence – 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. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016.”
The Chancellor, George Osborne will deliver his 2015 Autumn Statement today Wednesday, November 25th at 12.30pm.
Along with the detail of the spending review, the Autumn Statement is rumoured to include various changes that may affect contractors and freelancers working in the UK. He is, in particular, rumoured to be targeting tax relief on travel and subsistence expenses as well as those contractors who work through their own limited company.
We will be providing regular updates throughout the speech and on reviewing the full detail of the Autumn Statement once published, which is expected in early December.
We will also be monitoring the responses in the coming days and what these changes will mean.
Christmas is just around the corner and while limited company owners are all a bit old to be sending letters to Santa Claus, we thought we’d draw up a different wish list – one for the chancellor to read before his Autumn Statement.
1) Reappraise the dividend tax changes
From April 2016, changes to the rules governing dividend tax payments will make lots of limited company owners worse off.
The changes affecting limited companies will see the notional 10% tax credit on dividends abolished and replaced with a £5,000 tax free dividend allowance. Over this threshold, dividends could be taxed at a rate of up to 38.1% (for additional rate payers).
It is the dreaded time of year to get around to completing your self-assessment tax return.
Tax Return Deadline
Online tax returns should be submitted before the midnight 31st January 2016.
This is also the date any outstanding taxes need to be paid.
The deadline for paper tax returns was 31st October 2015.
Instead of putting it off and having the constant worry about it needing it doing contact Umbrella.co.uk today and we can help you get it completed within the next 2 working days.
Each year at the eleventh hour of the eleventh day of the eleventh month, many British people observe a Two Minute Silence. Armistice Day on 11 November marks the end of the First World War and is a day to remember and honour those who have paid the price for our freedom. Today remembers not only those who fought not only in World Wars, but the more than 12,000 British Servicemen and women killed or injured since 1945.
Those Umbrella.co.uk staff that wish to, will be observing the Two Minute Silence at 11am today. We hope that our customers and suppliers will understand that we will not be making or answering calls whilst we pay our respects.
Last week, MPs warned that the quality of customer service at HM Revenue and Customs (HMRC) was so poor that it could be could be costing the country money.
In a strongly worded report, members of the Public Accounts Committee (PAC) accused the tax office of only answering half of the calls to its customer service team. MPs also cautioned that those running tax evasion and tax avoidance schemes were “running rings around the taxman".
Committee statistics said that HMRC responded to 72.5 percent of calls in 2014-15, a rate that dropped to 50 percent in the first half of this year.
Although the customer services team have a target of answering 80% of phone calls within five minutes, the damning report said that operators were only getting to 39% in this time.
A lot of small business owners put off getting VAT registered because they find it daunting. But VAT doesn’t have to be taxing. The Flat Rate VAT scheme makes it easy, and it can help boost your post-tax profits too.
The Flat Rate VAT incentive is a popular choice for independent contractors, sole traders and directors of small limited companies. Read on to find out if it is right for you as well.
How Flat Rate VAT works
The Flat Rate VAT scheme is a government incentive designed to simplify taxation and get more small businesses growing.
A survey has found that a majority of UK contractors would vote to stay in the European Union (EU) if a membership vote were held tomorrow.
The research, which was published by The Association of Independent Professionals and the Self-Employed (IPSE) last week, found that 61 percent of contractors want Britain to remain a part of the EU.
This majority outweighs the 24 percent who would vote to leave and the 14 percent who were undecided.
If you are a contractor or freelancer the most tax efficient way for you to work is often through your own limited company. This allows you to benefit from the incentives offered for setting-up and running your own business and hence allows you to maximise your earnings after tax.
It also enables you to develop and build your business & brand and potentially in the future employ others.
The downside of this is that there is more responsibility on you as a director of your own limited company and there are statutory requirements re maintaining financial records, preparing and submitting year-end accounts, corporation tax returns, personal tax returns, payroll and managing invoicing & payments.
Umbrella.co.uk's spooky fun raised over £300.00 for East Cheshire Hospice. Staff made such a tremendous effort dressing up and baking cakes, the Directors have generously doubled the fundraising total!
East Cheshire Hospice is a haven of care and calm for people facing challenges at the end of their lives who live in the communities of Buxton, Congleton, High Legh, High Peak, Knutsford, Macclesfield, Poynton, Wilmslow and the villages and hamlets in between.
