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You may have heard on the news the phrase the “Living Wage” and wondered like us what it is.
The Living Wage is the amount it is estimated people need to earn to support their living costs. The amount is higher than the National Minimum Wage which by law companies have to pay.
Yesterday we highlighted the key changes to the amounts of personal taxation and national insurance contractors will pay due to changes that come into force for the new tax year (started 6th April 2015).
One of the changes that dictates how much many contractors will pay themselves as wages when working through their own Personal Service Company (PSC) is that employees national insurance now starts at a lower amount than employers national insurance (but up from the £153 in the prior tax year).
The recent Budget proposal to open a discussion on Umbrella Company expenses means that any changes or discussion are largely on hold until after the General Election with the aim of a discussion document being issued in the summer.
Budget 2015 confirmed that a review of contractors expenses and in particular travel & subsistence would take place in the summer of 2015 with potential changes being made for the tax year commencing 6th April 2016. It proposes that Supervision, Direction and Control (SDC) will be the key factors in deciding whether a contractor is genuinely a self-employed or should in fact be treated as an employee of the end client where they are working.
The Government has published the full budget 2015. A search for contractors, freelancers and umbrella companies highlights the following:
Umbrella companies and employment intermediaries
1.250 Autumn Statement 2014 announced that the government would review the growing use of overarching contracts of employment that allow some temporary workers and their employers to benefit from tax relief for home-to-work travel expenses, relief not generally available to other workers. This is unfair. As a result of the review, the government will change the rules to restrict travel and subsistence relief for workers engaged through an employment intermediary, such as an umbrella company or a personal service company, and under the supervision, direction and control of the end-user. This will take effect from April 2016 following a consultation on the detail of the changes. It will level the playing field between employment businesses that seek to lower their costs by using these arrangements and those that do not.
The Small Business, Enterprise and Employment Act 2015 has received royal assent and is now therefore inforce. This is the first time an act has been passed specifically for helping small businesses.
Happy and Tax aren’t often seen in the same sentence as each other but a New Tax Year is normally a happy event with increases to personal allowance bands meaning contractors can normally see a bit more in their take home pay each week.
ACAS (Advisory Conciliation and Arbitration Service) have released a report commenting on the impact of The Agency Workers Regulations that were released in the UK in 2011.
In Europe the aim of the Agency Workers Directive was to “establish a fair balance between two goals: improving the protection of agency workers (by establishing equal treatment) and supporting and recognising the positive role of agency work in bringing flexibility to the labour market (by encouraging the removal of excessive restrictions on this type of work)”.
In a speech designed to show how well the economy was recovering and how it was prosperity all around it may have been hard to notice that George Osborne had one eye on the huge number of contractors and freelancers that support the economy and its recovery.
The Chancellor started with his opinion of how “Britain is Walking Tall”. Economy growing faster than any other major country and number of people working at an all-time high with claims at a long term 40 year low.
Pre-Election buzz words are that the Government have a plan and it’s working and that it needs to be stuck to. From austerity to prosperity. Out of the red and into the black. Britain on right track, we must not turn back.
