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Rishi Sunak’s pared back Spring Statement contained only small crumbs of comfort for contractors and umbrella company workers.
A £3,000 increase in the threshold at which you start paying National Insurance (NI) contributions will help some low-earning employees. For many, however, this benefit will only slightly outweigh the simultaneous NI increase of 1.25%, and for some workers will only serve to reduce the loss.
The government has announced several tax increases on contractors and employees as it looks to bridge the funding gap in health and social care.
From April 2022, National Insurance Contributions (NICs) for employees and employers will increase by 1.25% along with a matching increase in the tax paid on dividends.
The Liberal Democrats have become the first political party to make a firm commitment to contractors ahead of the December election.
After seeing a preview of the Lib Dem manifesto, IPSE said that it included a number of policies designed to help self-employed workers, including a promise to review IR35 changes due to take effect next year.
Chancellor Philip Hammond has been forced to make a ‘screeching’ U-turn on National Insurance contributions (NICs) for the self-employed.
In his budget statement last week, the Chancellor said that he wanted to increase Class 4 NICs, which are only paid by self-employed workers, by two pence in the pound in 2019.
Following heavy criticism from Tory backbenchers, the media and the self-employed community, the Chancellor has dropped this policy.
The SNP leader in Westminster Angus Robertson called it a “screeching” U-turn while Labour said the move was “humiliating”.
HMRC have issued the take-up rates for the Employment Allowance which would have saved qualifying businesses up to £2,000 in employers’ national insurance contributions during the tax year 2014/2015.
Business groups have called on the Chancellor Rishi Sunak to delay a planned increase to National Insurance amid rising prices and a slowdown in recruitment activity.
Make UK, which represents 20,000 manufacturing firms in the UK, called the £12bn tax boost ‘illogical and ill-timed’. They argued that April’s 1.25 percentage point increase to the tax on employees and employers should wait until the economy is on a firmer footing.
Most umbrella companies that you’ll see online are legitimate businesses that pay the correct amount of tax and comply with relevant employment legislation.
Unfortunately, the sector is brought into disrepute by a small group of illegitimate companies that seek to defraud contractors and the state. It seems the latest attempt at doing this is with so-called ‘mini umbrella companies’.
A recent BBC investigation found that around 48,000 mini umbrella companies have been created in the UK in the last five years.
Calls from the Organisation for Economic Cooperation and Development (OECD) to revive plans for a self-employment tax hike have been met with scorn and confusion from self-employment pressure groups.
The last budget, delivered before the general election in June, included plans to increase National Insurance Contributions (NICs) for self-employed workers.
But in an embarrassing U-turn the Chancellor was forced to drop the tax hike when MPs pointed out that it contravened a 2015 election promise not to increase VAT, NICs or income tax.
A study completed as part of a broader investigation into the ‘gig economy’ could end up costing you up to £1,000 in National Insurance Contributions (NICs) if you work more than one job.
A survey, which was commissioned by the government, has concluded by recommending wholesale reform of the NIC system for employed and self-employed people with multiple jobs.
If applied, the recommendations would see NI applied on a ‘per person basis’, which would effectively mean a tax increase of up to £19 for some multiple job workers (nearly £1,000 per year).
Completed by the Resolution Foundation, the study represents part of a broader examination into tax and employment regulations in the modern era.
It found that many of the assumptions underpinning the so-called ‘gig economy’ were false.
From November 2014 HMRC are issuing 24 million personal tax summaries showing the tax you have paid and how it was spent. You should receive a tax summary automatically if you have paid any income tax in the prior tax year.
