Autumn Budget 2018

Check out Gorilla Accounting's Autumn Budget 2018 Summary

The Chancellor of the Exchequer, Philip Hammond, unveiled the Autumn Budget Statement on Monday 29th October 2018, laying out the financial plans for the coming year.

A handful of key measures were announced that will affect Contractors and Freelancers, including IR35 in the private sector. Here’s everything you need to know from Emily Caster, an Accountant here at Gorilla Accounting.

IR35 – Private Sector 

From April 2020, the rules surrounding IR35 will be the same as when working with a public sector body. This change will mean that the responsibility of confirming IR35 status will lie with the end client or agency, rather than with the worker.

If the worker is caught under IR35, it will be the responsibility of the agency or end client to calculate tax and National Insurance, as they would for employees. 

Philip Hammond said, 

“Widespread non-compliance also exists in the private sector. So, following our consultation, we will now apply the same changes to private sector organisations as well.

“But after listening carefully to representations made during the consultation, we will delay these changes until April 2020 and we will only apply them to large and medium-sized businesses.”

Personal Allowance and Higher Rate Threshold 

From April 2019, the Personal Allowance will increase to £12,500 and the higher rate threshold will increase to £50,000. This change will come into force one year earlier than planned. The rates will stay the same for the 2020-21 tax year. 

Entrepreneurs’ Relief 

The minimum period to meet the qualifying conditions for Entrepreneur’s Relief has increased from 12 months to 24 months.

This will come into force in April 2019 and the rate will remain at 10%. 

From 29th October 2018, shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company. This is in addition to the current requirements of having at least 5% share capital.

Employer’s NI – Employment Allowance 

The annual allowance of £3000 will be removed for employers with employer NI contributions of at least £100,000 in the previous tax year. 

Employers Allowance will change from 2020. 

VAT Registration Threshold 

The VAT registration threshold will remain at £85,000 for 2 years, until 2022. 

As expected, the Chancellor announced changes to IR35 rules in the private sector after claiming ‘widespread non-compliance’. Changes to IR35 in the public sector were only just announced in the Autumn Budget Statement in 2017. 

To read the full Autumn Budget Statement, see here.

For more information on the Autumn Budget Statement 2018, read our blog post ‘Autumn Budget 2018 – IR35 reform extended to the private sector’ here

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