tax Articles

The Chancellor’s first Autumn Statement contained some pretty eye-watering sums. The estimated cost of Brexit at £58.7bn and an extra £122bn of borrowing in this parliament are two of the biggest.

There were some positive numbers though. £26bn to fund investment in housing, transport, digital technology and research and development will prove valuable to contractors in some of these industries.

Others, meanwhile, will be left counting the cost of tax increases. Here are seven of the most important points for contractors and limited company owners.

marketing | 21 March 2016
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The Chancellors fourth Budget in 12 months arrived on Wednesday and it confirmed a number of policy changes that we already knew were going to arrive. Restrictions on Travel and Subsistence tax relief for IR35 contractors and changes to the dividend tax will take effect as planned in April.

The most significant new announcement will be of concern to contractors working through a personal service company (PSC) in the public sector.

An HMRC policy document reveals that from April 2017, public sector organisations will be responsible for enforcing IR35. This marks a significant change from the current system, whereby the PSC or agency judges whether a contractor is caught out by IR35.

Effectively, this means that many more public sector contractors will fall under the remit of IR35 legislation and will receive less take home pay as a result. This change is scheduled to take effect in April 2017 following a consultation. 

marketing | 20 January 2016
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A controversial proposal that could see small business owners forced to update their tax bill four times a year will be debated in parliament next week, after an online petition was signed by more than 100,000 people.

The parliamentary petitions committee, which handles online petitions, has scheduled a debate on ‘quarterly tax returns’ for the afternoon of the 25th of January.

Small business owners reacted angrily when the proposal was first announced by Chancellor George Osborne at his Autumn Statement. To vent frustration, business owner Paul Johnson started an online petition that has since been signed by over 107,000 people. 

marketing | 26 November 2015
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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.

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). 

Midnight on July 31 is the deadline for making your second ‘payment on account’ to HMRC.
If you are self-employed or you own a business and you think that you have to make an advance ‘payment on account’ for this current tax year then this is your last chance to pay before you receive a fine.

The government has come under increasing scrutiny this week after a tax agreement reached with Google was labelled a “major success” by George Osborne, but dismissed as a raw deal by almost everybody else.

The £130 million deal, which covered ten years of trading, was branded a “sweetheart deal” by the Labour finance minister, while on David Cameron’s government benches the business minister Anna Soubry admitted that it did not appear to be an “awful lot of money.” 

marketing | 4 December 2015
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With the ink barely dry on the Autumn Statement, chancellor George Osborne has announced that his 2016 Budget will take place in less than four months’ time on the 16th of March.

Importantly, this date is just before the new April tax year, which opens up the possibility that the Chancellor could enact some last minute tax changes that could be disadvantageous to contractors. 

marketing | 26 November 2015
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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. 

marketing | 2 November 2015
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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.  

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