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The Budget 2018

 

So what are the key points that may affect you as a contractor?

Once again a prominent feature of the budget made reference to the “fair and sustainable tax system”. Well on one hand, we saw the personal tax free allowance increase to £12,500 and the higher earnings threshold reach £50k, which I can’t see too many people complaining about, but we also saw, what appeared inevitable, with the reform of IR35 in the private sector due in April 2020.
 
Section 3.8 of the Red Book detailed the governments aim to bring private sector organisations inline with Public Sector bodies and agencies, pushing the responsibility onto the organisation, agency or other 3rd party engaging the worker. However, in a small turn of events, the impact will not be felt on smaller organisations; normally defined by a figure of 100 employees or less. There will be no impact for contractors already working through an umbrella.
 
On the positive side the pensions lifetime allowance has increased to £1,055,000 - so if you are looking for any kind of tax saving via PAYE, then salary sacrifice pensions may be the way forward.
 
Section 3.75 interestingly states that the fallout from Brexit may yet have an effect on UK Tax Legislation with minor amendments likely but who knows if that is likely to change the governments stance on the valuable gig economy.
 
We have already seen the outcry across social media to try and stop the reform before April 2020, however if we look back at the previous reform and the introduction of the T&S in April 2016, once the government are in full flow aims to stop the reform seem futile, time may be better spent looking at how the government can stop any basket approaches to the reform. At the end of the day they want a “fair and sustainable tax system” so this has to work both ways. Penalties for blanket bans may be the way forward!
 
Agencies and End Clients will need to start their preparations... whether that is reviewing who will ensure that CEST test are performed effectively, how deductions for tax and NI will be made and substantial due diligence on any umbrella companies they may choose to work with. It is expected that there will be a rise in non-compliant brollies, leaving agencies, end clients and contractors at risk, so make sure you know your brolly, invest time in that relationship and understanding exactly how they operate!
 
In further attempts to tackle ongoing tax avoidance, following Royal Assent of the Finance Bill 2019/20, directors and other persons involved in tax avoidance, evasion and interestingly phoenixism will be held jointly liable where there is a risk that the company may deliberately become insolvent. Updated offshore tax compliance strategy will be published showing the progress made and the non-compliance since the previous strategy was published in 2014.

Download our full guide to the 2018 Budget

Should you have any queries regarding the 2018 Budget, please do not hesitate to contact us on 01206 591 000 or email us on info@contractorumbrella.com.

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ContractorUmbrella is the hassle-free, straight talking umbrella company that provides umbrella employment for UK based contractors and freelancers. Independently voted as the best umbrella company by the readers of Contractor UK.

As one of the most trusted umbrella companies in the UK, we guarantee our employees peace of mind, absolute compliance and complete security. We are one of the longest standing and most respected umbrella companies in the UK.

Benefits of working through ContractorUmbrella;

  • Fast and easy registration-  be ready to work in 24 hours, simply register online and we’ll take care of the rest.
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