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Budget2016 (7): Qdos - What you need to know

by Susie Hughes at 12:57 23/03/16 (Political News)

Chancellor George Osborne stood up in the House of Commons to present the Finance Bill 2016, designed to 'act now, so we don’t pay later' as he consistently made a point of throughout the Budget.

He set out aims for a 'low tax, entrepreneur Britain' supporting small businesses and entrepreneurship with tax cuts and simplified admin. The Budget that backs small business has set out both positive and negative actions for contractors. Specialist contractor insurance provider, Qdos Contractor, highlights the key points: Corporation Tax The government has promised to further reduce corporation tax to 17 per cent in 2020 which was previously promised at 18 per cent. Class 2 National Insurance Contributions The Government aim to abolish Class 2 NICs completely (and reform Class 4 NICs to ensure the same benefits are received), in order to support the self-employed workforce and simplify tax payments. No date has been set for this, and consultation is welcome as to how best approach it, but this would cut NI contributions for '3.4 million self-employed people'. Personal Tax Allowance Previously promised at £11,200 for 2017, the Budget 2016 announced that they will increase the personal tax allowance to £11,500 instead. It is £11,000 for the 2016/17 financial year. Dividends Tax Advertisement Not mentioned in Osborne’s presentation, but confirmed in the subsequent documentation, is the confirmation of dividends tax changes initially presented in the Summer Budget last year. This will mean from April 6 this year, that the 10 per cent tax credit will be abolished and replaced with a £5,000 tax allowance, increasing the tax paid on dividends for all rates. Travel and Subsistence Also not mentioned in the presentation, is the confirmation of the travel and subsistence restrictions to be placed on those operating via an employment intermediary (where IR35 applies), which will particularly affect those currently using umbrella companies. Public Sector Public sector bodies and agencies will be made responsible for operating IR35 for their limited company contractors from April 2017. “The Government will consult on a clearer and simpler set of tests and online tools” to support this decision but this appears reminiscent of the failed Business Entity Tests. It is unclear how far the public sector bodies and agencies will be expected to go and what level of support they will receive for administering this. You can access the full technical note here. Oil and Gas Industry For those of you who work in the energy sector, Osborne has announced that in light of the falling oil prices, the Government will support the industry by halving the supplementary charge from 20 per cent to 10 per cent, and abolishing petroleum revenue tax. These changes will be backdated to the start of this calendar year, in order to support jobs in the industry as well as the Scottish economy. Budget information Shout99 is reporting on all issues relevant to freelancers and small businesses in the Political News section of Shout99. Alerts also available through our Twitter feed. Tweet -- 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 2016

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