|
Martin Hesketh of Brookson writes:
In the Budget announcement, the Chancellor was bullish regarding the positive state of the UK economy, perhaps not surprising given the forthcoming election, with references made to Britain having its highest rate of employment in its history and GDP forecasts being upped.
This message was tempered however with reference to there being no short term giveaways, no irresponsible spending or unnecessary borrowing with an extra £30 billion savings still needed to maintain the economic recovery. This will be achieved by saving £13 billion from government departments, £12 billion from welfare savings and £5 billion from tax avoidance, evasion and aggressive tax planning.
Having read the detail behind the speech, the £5 billion to be collected from tax avoidance is primarily sourced by increasing the Bank Levy from April 2015 and as a result of HMRC targeting aggressive tax avoidance schemes used by large corporates and the promoters of such schemes.
Unsurprisingly, given the recent HMRC discussion document on proposals to remove the availability of travel and subsistence expenses from umbrella company employees, The Chancellor made specific reference to umbrella companies and recruitment agencies, stating “we will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence – while we protect those genuinely self-employed”.
HMRC will address this issue by consulting with interested parties over the summer with a view to introducing new legislation in April 2016. For the majority of our customers who work through their own limited company we are not expecting the consultation or subsequent legislation to have any negative impacts. We do have a concern however that the result of the consultation will have an impact on umbrella company employees, however, what this will be and how it will be assessed is not yet known.
Whilst we welcome the Government being willing to engage on compliance within the umbrella market our view is that it is unfair to penalise a professional contractor undertaking a series of assignments at different worksites for the same employer by removing a legally accepted relief.
We are disappointed that there is no acknowledgement of HMRC needing to do more to enforce existing legislation to address non-compliance in the current umbrella market, for example the use of Pay Day by Pay Day schemes and misuse of dispensations. We also believe that the removal of travel and subsistence expenses from umbrella employees is not only wrong from a fairness perspective but also at a macro-economic level due to the unnecessary impact it will create within the UK’s flexible workforce; such as a reluctance for contractors to travel long distances for work and a potential migration to non-compliant models.
Advertisement 
As ever, there are a number of changes announced to tax rates and allowances which will be of interest to contractors and freelancers including continued increases to the personal allowance and higher rate tax thresholds and proposals to remove the requirement for individuals to file personal self-assessment tax returns. All the relevant changes are detailed in Brookson's free Budget summary guide.
For further information
Full coverage of issues affecting small businesses and freelancers - and experts reactions to them - will be available in the Political News section of Shout99.
Alerts also available through our Twitter feed.
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2015
|
