Our blog keeps you in‑the‑know when it comes to the industry news and updates relevant to you and your business. You'll also find useful guides to help you operate more effectively and efficiently today and into the future.
The recently announced Autumn Budget provided lots of new information for contractors, including extending the public sector IR35, targeting tax avoidance and evasion and finally, an investment in the UK housing market. Here’s what could affect you as a contractor.
IR35 Private Sector Rollout
IR35 affects all contractors who do not meet HMRC's definition of 'self employment'. The IR35 rules result in an increased tax and N.I. liability and will prevent contractor companies from retaining profits to grow their business in the future.
The document states “early indications are that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company.” Extending these rules could mean many contractors will struggle to ever secure a fair IR35 assessment.
VAT Threshold Remain
In better news for the contracting sector, the Chancellor announced confirmation that the £85,000 VAT registration threshold will remain the same for the next two years from April 2018. The Office of Tax Simplification called for a reduction to the threshold but the decision was kept to remain.
Less focus on contractors and tax avoidance
The Chancellor announced new measures targeting tax avoidance and evasion. This includes attempts by some employers to avoid their NICs obligations, as well as measures to prevent disguised remuneration avoidance schemes.Here’s a handy summary of what else was announced;● There are over 32 million people in work – near a record high.● Borrowing has fallen by three quarters since 2010 (but debt is still high)● An extra £3 billion to prepare for Brexit over the next two years● £6.3 billion of new funding for the NHS● Abolishing stamp duty land tax (SDLT) on homes under £300,000 for first-time buyers from 22 November● 300,000 new homes a year, an amount not achieved since 1970● The National Living Wage and the National Minimum Wage will increase from April 2018 (from £7.50 per hour to £7.83 per hour from April 2018)● The tax-free personal allowance will rise with inflation to £11,850 from April 2018 ● Fuel duty will remain frozen for an eighth year● A new railcard for those aged 26 to 30● Duty on beer, wine, cider and spirits will be frozen● Duty on tobacco will rise● 95% of passengers will not see an increase in their Air Passenger Duty● Households applying for Universal Credit will get more upfront support● An extra £100 million will go towards helping people buy battery electric cars. ● The world’s first national advisory body for artificial intelligence (AI) to allow the UK to lead the world in developing practical uses for the technology● More investment in maths and science in schools● £64 million for construction and digital training courses● A £220 million Clean Air Fund for local areas with the highest air pollution● Reducing single-use plastics waste● Business rates will switch to being increased by the Consumer Price Index (CPI) 2 years earlier than planned● Pubs in England will continue to receive a £1,000 business rates discount next year● Stopping digital multinationals who hold intellectual property in low-tax countries from avoiding tax● £1.7 billion will go towards improving transport in English cities
If you’d like further support, 2020 Accountancy can provide you, as a freelance contractor, sole trader or limited company contractor, a range of services to help you with the day to day management of your business. Get in touch with 20/20 today.