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While the general public welcomed announcements, there seemed to be a downside for contractors; or there were concerns they would be caught up in a remedy for someone else's problems.
July:
Summer Budget: The Summer Budget didn't bring much sunshine for the contracting community, as the Chancellor seemed to be introducing a range of measures which were specifically targeted at the sector. Coming over the horizon was a four-pronged attack...
** A review of how to improve effectiveness of IR35 as it was estimated that non-compliance in this area cost over £400 million a year;
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** The Government indicated in a consultation document that it intended to remove tax relief for the home-to-work commuting of umbrella workers and directors of their own limited companies (Personal Service Companies);
** Employment Allowance, designed to help businesses who employ staff to reduce their national insurance bill, will be increased. The bad news was that it will no longer apply to sole directors, that is many contractors working through their own limited companies.
Full coverage of the Summer Budget is available in the Political News section of Shout99 (under 'Summer Budget 2015')
August:
Dividend tax: As more details emerged about the Budget announcements, so the concerns of contractors were grew. The new dividend allowance was described as a tax rise 'by the back door'. Although it was billed that the £5,000 dividend allowance would be tax free, the detailed information shows that it will sit inside the tax bands.
New dividend allowance is tax rise ‘by the back door’
IR35: The Government set out its proposals to fulfill its Budget commitment to make the controversial freelancer tax, IR35, 'more effective in protecting the Exchequer'.
IR35 Mark 2 heads closer as Government consults
The agency sector went public with its concerns that the proposals for an IR35 Mark 2, could have a devastating effect on the recruitment sector. Trade body, APSCo, said that the increased responsibility placed on the end client or the recruiter by the proposals would result in everyone erring on the side of caution rather than taking a legitimate risk.
IR35 proposals would be a disaster for the contractor recruitment sector
September:
HMRC: Summer holidays were over and HMRC stepped up its activities.
Contractors who used ‘contractor loan’ tax planning schemes were given until September 30 to finalise settlements with HMRC or risk larger bills to regularise their tax positions.
Settlement deadline looming for contractor loan scheme members
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HMRC local compliance investigations drag on
A City law firm accused HMRC of increasingly using ‘nudge’ letters to circumvent the normal dispute resolution process and put pressure on individuals currently engaged in a dispute. It claimed that the controversial ‘nudge’ letters were sent directly to taxpayers involved in disputes with HMRC, using behavioural psychology to subconsciously nudge taxpayers to settle.
HMRC making increasing use of ‘nudge’ letters
Dividend tax: The so-called dividend tax continued to concern contractors and one entrepreneur started an online petition calling on the Government to rethink the measure.
Petition calls for a rethink on dividend tax
October:
Travel and subsistence: Fears of a cut back in travel and subsistence allowances were gaining ground. The Government had earlier said that it would consult on removing the tax break for T&S. While it was originally thought it might only affect contractors who operated through an umbrella, there were growing concerns that it could impact on all limited company contractors.
Tax grab threatens contractors and temp workers
Dividend tax: Although the petition calling for a rethink on dividend tax topped 25,000, the Government was not for turning, as it explained the measure was necessary to reduce the 'incentives for tax motivated incorporations'.
Government seeks to restrict 'tax motivated incorporation'
November:
Autumn Statement:In the run up to the Autumn Statement, rumours and speculations set the freelancer world a-twitter at the prospect of a further clampdown on working through so-called personal service companies (PSC).
Two national newsletters reported that the Government is considering introducing measures which could force the vast majority of freelancers who work for a single client for more than a month, to go on to the payroll.
The uncertainty led to speculation that it could be a 'kite-flying' exercise to test the reaction; it could be trailing the worst-case scenario which makes the 'not-so-bad' scenario look much better, when it appears; or it could be the rumour mill churning on overtime.
Whichever it was, at the end of the day, contractors breathed a sigh of relief at the details on the day and no news was deemed to be good news.
However, it was no such good news on travel and subsistence, as the Chancellor confirmed swingeing cuts to contractor travel and subsistence expenses would go ahead as planned.
See: Political News section of Shout99 (under 'Autumn Statement - AS2015')
December:
Travel and subsistence: There was a glimmer of light for some when the detail of the T&S rules came clearer. The 'get-out clause' for those not under supervision, direction and control provision, as it meant likely exemption for those who operate outside IR35. However, with IR35 under review, it still left many unanswered questions and an uncertain future.
Details of plans to scrap tax relief for contractors emerge
See also: Shout99's Review of the Year - first half of 2015
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Susie Hughes © Shout99 2016
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