Philip Hammond announced that this would be the last Spring Budget. The last time a ‘last spring budget’ was announced was 24 years ago by Chancellor Norman Lamont. 10 weeks later he was sacked…
Watch this space.
In a budget that some say is backtracking by the Conservatives, and with further tax measures taken against the self-employed, Danbro take a look at the major changes affecting the contractor and freelance community:
- The big news was that Class 4 National Insurance Contributions for the self-employed are to increase from 9% to 10% from April 2018 and then to 11% from April 2019. This goes against the Conservative Party election manifesto published just 2 years ago
- The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018
- As set out at Autumn Statement 2016, the Government will cut the rate of Corporation Tax to 19% from April this year and then again to 17% in 2020, with the message from Hammond that “Britain is open for business”
- As announced at Autumn Statement 2016, the Government will introduce a new penalty for a person who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC. This new regime reflects an extensive consultation and input from stakeholders
- New legislation will “ensure that promoters of tax avoidance schemes cannot circumvent the POTAS (Promoters of Tax Avoidance Schemes) regime by re-organising their business by either sharing control of a promoting business, or putting a person or persons between themselves and the promoting business. This will ensure that HMRC can apply the POTAS regime as intended”
- HMRC is actively monitoring National Insurance Employment Allowance compliance following reports of some businesses using avoidance schemes to avoid paying the correct amount of NICs
With the Government working hard to close what they deem to be an unfair tax gap between the employed and self-employed, Danbro Executive Chairman Damian Broughton issues a warning about the emergence of ‘new models,’
“The Government have seen the positive effects of focusing on anti-avoidance measures and are continuing along that path. With the off-payroll IR35 changes in the Public Sector about to come into law on 6th April, we have seen many new models being promoted. We advise caution when considering these models, as your hard earned income could be lost if the promoter and facilitator of these models are caught by the new, robust anti-avoidance measures.”
There is now a need more than ever to find a compliant provider, and to be wary of those offering unrealistic promises to you and your business. We should remember that despite these tax measures, there are still benefits to existing models, including working through your own Personal Service Company.
While Hammond commented on Britain’s resilient economy and “strong labour market,” this is something which is undoubtedly supported by the success of our contingent workforce, which continues to go from strength to strength, despite recent legislation.
And there could be further opportunities for the self-employed with funding in technology promised, as well as transport spending of £90 million for the North and £23 million for the Midlands.