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Budget 2015 (5): Reactions from freelancer community
by Susie Hughes at 11:22 20/03/15 (Political News)
The Budget contained few surprises given it had been so widely trailed. Clearly, the Government wanted to present as much good news as possible in a Budget only weeks before a General Election.
The main news for contractors, particularly those operating through umbrellas, was how the clampdown on travel and subsistence would impact on those who are 'under supervision and control'.

But there were other measures too. As the dust settles and the ink dries on the supplementary documentation, industry groups and practitioners in the freelancer world give their reactions.

IPSE - Cautious welcome
Self-employed group, IPSE, welcomed the Chancellor’s ‘pro-small business’ Budget with announcements specifically designed to support the self-employed.

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They highlighted a number of positive measures specifically for the self-employed, such as the abolition of Class 2 NICs and annual tax returns, and a package of tax breaks for the North Sea Oil and Gas industry. Although they did recognise that the consultation on changes to travel and subsistence expenses could have an impact on independent professionals 'if not implemented carefully'.

Simon McVicker, Director of Policy and External Affairs at IPSE, said: “The Chancellor said his Budget backs the self-employed and announced a series of measures specifically designed to help independent professionals across the country. His pro-small business announcements like tax breaks for North Sea oil and gas producers will hugely benefit the large number of contractors working in this important sector.

“The removal of Class 2 NICs will be a big boost to those working as self-employed. It represents a major simplification of the tax system which will save them around £143 year.

“The abolition of the annual tax return is an attempt to reduce red tape and drag the tax system into the digital age. However, we would urge George Osborne to carefully consider the delivery of this and ensure business groups are consulted. The UK has an army of 1.8 million highly skilled independent professionals who the Government can draw on to implement this project without delay.

“George Osborne also insisted that genuinely self-employed people would be protected in his crackdown on employment intermediaries claiming travel and subsistence. However IPSE is concerned that if not handled carefully by the Government this could be very damaging for the UK’s smallest businesses. We will be working closely with Government to ensure this is not the case and we have already spoken to a senior HMRC official on this matter.”

APSCo - unclear on agencies
Responding to the announcement that the Government would be 'clamping down on the agencies and umbrella companies who abuse tax reliefs on travel and subsistence', Samantha Hurley, from, agency group, APSCo, said: “The Chancellor’s mention of 'agencies' with regard to this issue actually relates overwhelmingly to umbrella companies and PSCs.

"Unfortunately, it is not entirely clear from the Budget report exactly what action the Government intends to take, although it talks about restricting tax and subsidy relief for workers engaged through an employment intermediary where the worker is under the supervision, direction, and control of the client. In light of this, it’s possible that they may apply a similar test as already exists to determine the workers employment status for tax purposes.

"This seems to suggest that the Government has abandoned its original plan to abolish tax and subsidy relief for such workers, and listened to the over-whelming response from the industry to tighten the rules instead. This appears to be a more positive outcome for the recruitment sector as a whole, but we will reserve judgement while we await an official consultation.”

In response to the Chancellor’s comment that the Government wants, 'employment intermediaries to provide workers with greater transparency on how they are employed, and what they are being paid', Ms Hurley said: “APSCo has previously confirmed to the Government that it does not believe that this is an issue within the professional sector, and we would not want to see our members burdened with more unnecessary red tape to comply with regulation aimed at protecting potentially vulnerable workers. I would imagine that a consultation from BIS on this may well form part of its proposed changes to the Conduct Regulations.”

Summarising other key points raised during Osborne’s speech, she concluded: “APSCo welcomes ‘Northern Powerhouse’ initiatives – including a Greater Manchester devolution deal, investment in local industry and the green light for HS3. We believe that APSCo members, particularly those based in the North of England, will be able to positively contribute to this proposed growth by providing resourcing partners to encourage highly skilled workers to support these projects. APSCo also welcomes the support being provided to the Oil and Gas sector, one which has been under great pressure in recent months.”

ACCA - Political
The Association of Chartered Certified Accountants (ACCA) claimed this was a political Budget focused on a range of populist measures, as was to be expected this close to the General Election.

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Chas Roy-Chowdhury, head of taxation at ACCA said: “As you’d expect so close to the General Election, this was a political Budget from a political Chancellor.

“It contained a number of welcome measures that will go down well with voters from a range of economic backgrounds such as a further increase in the personal tax free allowance to £11,000, a new fully-flexible ISA and the new first-time buyer bonus.”

On the news that the Government will launch a review into SME business rates, he said: “Business rates can be a punitive cost for small businesses looking to grow, especially those operating in the retail sector, so the Chancellor’s commitment to a review is to be welcomed.”

On the announcement from the Chancellor of a reduction in lifetime allowance from £1.25m to £1m on pensions, he said: “This is not the right way to deal with long-term investment. Every year the Government steps in and moves the goalposts.

“The Chancellor should exercise caution when meddling with the pension pots of those who have been contributing to them for 30 to 40 years in many cases. They are heavily relied upon by those looking to retire and care should be taken not to jeopardise their future.

“As expected Osborne continued with the policy of greater flexibility for pensions by allowing the sale of annuities. The big challenge for the Chancellor is to create a fair market for these sales.

“What the Chancellor didn’t make crystal clear was the tax implications of withdrawing a lump sum. There is the potential for a large number of people to get quite a shock when they find out they will have tax to pay on their money should they wish to get their hands on it.”

On the Chancellor’s plans for fighting tax avoidance, he said: “Combating tax avoidance has been a key plank of this Government’s rhetoric for the last five years, so today’s announcement came as no surprise.

“We are disappointed that the Chancellor has chosen not to wait for the OECD’s important work with the G20 to be completed before pressing ahead with his plans. Any measures must be backed up with additional resources for HMRC otherwise they will be nothing more than headline grabbing soundbites.”

On the news that the Government will phase out conventional tax filing by as many people as possible, he said: “This move to the brave new world of digital tax returns will allow people to have a holistic view across the range of taxes they pay. As well as settling their taxes, taxpayers will be able to amend their tax codes and even pay their parking fines online, which is welcome news.

“Many of those filing paper self-assessment forms are self-employed people and those running small businesses who have been using the postal method for many years. They need to be given access to resources which help them move the process online to ensure they aren’t left behind.”

ACCA said that it was however disappointing to note that the starting point for paying National Insurance Contributions was not increased alongside personal tax free allowance. Chas Roy-Chowdhury said: “ACCA has called for this since the Chancellor began raising the income tax threshold in 2010. The NIC’s bands need to be raised in line with personal tax free allowance to ensure the amount of tax people pay remains consistent and fair for all.”

giant - transparency
Umbrella organisation, giant, focused on the announcement of an HMRC consultation around possible restrictions on travel and subsistence expenses for umbrella and PSC workers who are under the supervision direction and control of the hirer.

A separate BIS (Department of Business, Skill and Innovation) consultation was also announced to ensure that employment intermediaries provide workers with greater transparency on how they are employed and how and what they are being paid.

Matthew Brown, managing director of giant group said: “We welcome HMRC’s consultation which ultimately levels the playing field for employment providers stopping the abuse by a small minority of suppliers of low paid workers where tax relief is used to lower their employment costs.

"As a fully compliant umbrella organisation we recognise the need for this type of legislation whilst also understanding that the Government must not adversely affect the UK’s professional flexible workforce which chooses to operate through an umbrella. The UK flexible workforce is extremely important to a range of industries and contributes directly to UK annual GDP growth.”

“We also welcome the BIS consultation which ensures that there is full clarity and transparency for workers who are engaged via intermediaries in terms of how their pay is made up. As a fully compliant FCSA member we abide by a strict code of conduct which already includes being fully transparent in terms of workers’ engagement and pay."

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.

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Susie Hughes © Shout99 2015

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Budget 2015 (5): Reactions fro... Susie Hughes - 20/03
    Tax grab on expenses alexp - 26/03
       Re: Tax grab on expenses Wilberforce - 26/03
          Re: Tax grab on expenses ThePower - 27/03
             Re: Tax grab on expenses Wilberforce - 30/03

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