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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.
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.
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.
Self-employed contractors and umbrella PAYE employees had lots of reasons to cheer at this year’s party conferences. We’ve highlighted some of the most important points that could affect our clients.
As the party in government, what came out of the Conservative camp in Manchester will have the most immediate impact for our contractors.
David Cameron announced a relaxation of planning rules in an attempt to boost home ownership. Under the plans, builders would no longer be required to offer low-cost ‘affordable’ homes as part of new developments. More building work is always welcomed by construction contractors whether they are self-employed or PAYE.
Following George Osborne’s Budget speech there’s been a lot of conjecture and analysis of what the changes will mean for the contracting industry. Now that the dust has settled and the numbers have been crunched, there’s no getting away from the truth of the matter – it’s not good news, despite the excitement of Ian Duncan Smith. However, it’s certainly not all doom and gloom and changes to how contractors are taxed won’t diminish the growing demand for their skills.
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).
In response to a petition asking the government to reconsider their proposed dividend tax hike, HM Treasury published a statement which, according to critics, was out of touch with the contracting industry and the needs of small businesses.
The reply was published on the Parliament website where, once a petition reaches 10,000 signatures it must receive an official response from the government.
One contractor writing for IT Contracting dissected the government’s statement and explained paragraph by paragraph why it was “factually wrong” and removed from the realities of running a small business.
On Friday HMRC released the discussion document inviting contributions from the industry on how best to police the murky area of disguised employment.
At first glance the consultation seems conflicted proposing two equally unsatisfactory options and then asks for someone else to come up with the magic solution for this thorny issue.
Perhaps the most concerning element of the document can be found on page 8 where it is suggested that the engaging party rather than the PSC be held responsible for the deduction of TAX and NI exactly as they would for a normal employee. Based on how open to interpretation the current legislation is and how few successful cases HMRC bring against contractors it is surely unfair to expect the engager in these circumstances to make that decision and then enforce it onto a supplier that they want to keep on side.
Dotted around the recent Queen’s Speech, eagle-eyed commentators picked out certain areas that could be of benefit to the UK’s contracting community. In particular the issue of taxation captured attention
