Autumn Statement - 5 key takeaways for contractors
In amongst the Britain’s Got Talent audition that the chancellor took part in yesterday were some announcements regarding the economy and some good news for contractors. We won’t repeat his numerous Christmas Cracker jokes but here’s the 5 key takeaways for contractors;
Off Payroll working the private sector
It’s a bit of a mouthful but the above refers to the recent IR35 reforms to the public sector being rolled out to the private sector which would affect thousands of limited company contractors. The good news is it doesn’t look like the rules will be extended to the private sector until 2019, although there has been no confirmation on the date as yet. The government is launching a consultation to assess the potential impact which we will contribute towards as part of our membership of both Professional Passport and the FCSA.
No reduction in the VAT threshold
Although the option was on the table for the chancellor to reduce the VAT registration threshold from the existing £85,000 he has chosen to leave it as is for the next two years. With recent changes to the flat rate scheme this is useful for those contractors who won’t hit the threshold, so don’t need to register and take on the additional administrative burden.
Increases to Personal Tax allowances ,thresholds and national living wage
All contractors will see a benefit from the changes effective from April next year raising the tax free personal allowance to £11,850 and the 40 percent tax band up to £46,350. The chancellor has calculated that this will benefit the average tax payer by c£1k a year.
The National Living Wage receives a higher than inflation rise to £7.83 an hour which means some umbrella contractors may need to negotiate a rate increase prior to April 2018.
Receipts no longer required for scale rate subsistence expenses
To quote the chancellor the above sounds rather “economicky” but it effectively means less work for any umbrella contractors that can claim food and drink expenses at agreed HMRC “Scale rates”. All reputable umbrellas will ask their contractors to keep the receipts and will occasionally audit them, however from now on the contractor will no longer be required to keep those receipts.
No Benefit in Kind for charging electric vehicles at work
Whilst a bit niche at the moment this is potentially great news for those contractors that do have an electric car and need to charge it up. With £400m earmarked for charging infrastructure and £100m towards grants it’s a technology that will become more and more prevalent over the coming years so it’s worth considering if you’re thinking about changing your vehicle.
The chancellor’s hands have been tied by some gloomy forecasts and uncertainty around Brexit but the good news is more centered around what he hasn’t done rather than what he has. With an apparent reprieve of the off payroll working in the private sector rules for now and leaving the VAT threshold as is it means that contractors, who have felt the pinch in recent years, haven’t been targeted for once.