Key Taxation changes for Contractors
Following on from yesterdays budget the key changes for contractors working through Umbrella Companies or through their own Personal Service Companies (PSC) can be summarised as follows:
Umbrella and PSC (Employees)
From 6th April 2011
Personal Allowances increased from £6,475 to £7,475.
Reduction in the basic rate limit from £37,400 to £35,000 to give a higher rate threshold at £42,475.
i.e. £35,000 plus £7,475.
Employee National Insurance rates increased by 1% to 12% (was 11%) between lower limit (earnings over £139 per week (£110 per week previously)) and upper limits (earnings over £817 per week (£844 per week previously)) and 2% (was 1%) over upper limit .
Employers National Insurance rate increased by 1% to 13.8% (was 12.8%) for earnings over £136 per week (£110 per week previously).
Tax Free Mileage increased for 40p per mile to 45p for first 10,000 miles (remains 25p thereafter).
From 1st April 2011
Small Profits Tax Rate 21% to 20%.