The Chancellor George Osborne has delivered his eagerly anticipated Autumn Statement. In an attempt secure a £10.1bn budget surplus by 2020, he’s set out the Governments spending plans for the next 4 years. Many Contractors and Freelancers were expecting to be hit hard, however there was little mention of any changes to the industry.
We’ve set out the key points from the announcement and what Contractors should expect in the future.
Key Points
- The much debated plans to cut tax credits has been abandoned
- Government spending to rise from £756bn this year to £821bn by 2019-20
- Day-to-day departmental spending to be cut by £20bn by 2020
- State pension to rise by £3.35 a week to £119.30 next year
- 3% increase on stamp duty for buy-to-let properties
- Small business rate relief to be extended by another year
- A further £800m to be allocated towards tackling tax evasion
- Policing, health, education, international aid and defence budgets protected
- Transport, environment and energy among biggest losers, resource budgets falling by 37%, 15% and 22% respectively
Contractor Specific’s
Prior to the announcement, there were many rumours circulating around the industry that predicted today could be ‘D-Day’ for Contracting as we know it. It was expected the Government would announce reforms to: end travel and subsistence tax relief, increase tax on dividends, cap contracts at one month and toughen IR35 legislation.
This was however not the case!
It is important to note that the Government could still be considering issues related to Contracting, however it seems the industry has survived – Contractors live to Contract another day! One noteworthy point that was not mentioned in the speech but is however mentioned in the report, is that the Government have confirmed that the restriction of Travel & Subsistence tax relief only relates to those operating WITHIN IR35. The report states:
“The Government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediaries, such an Umbrella Company or a Personal Service Company. Following consultation, relief will be restricted for individuals working through Personal Service Companies where the intermediaries legislation applies.”
Tax relief for Travel and Subsistence expenses will be restricted as of 6th April 2016, with draft legislation to be published on 9th December 2015.
There are no new announcements in direct relation to IR35 legislation, however this could still be in the pipeline, so it’s one to keep an eye on in the future. There are also no changes to the Dividend Tax hike that is set to come in to force in April 2016. Show your support by signing the petition against the Dividend Tax increase HERE.
Another big prediction that was left out of the Statement was any attempt to tweak or remove Capital Gains Tax relief that entrepreneurs receive when they sell their businesses – known as ‘Entrepreneurs Tax Relief’. These expected changes were said to be pocketing the government an additional £3bn a year if agreed – it comes as a shock to hear no announcement on this.
It seems the government came to their senses after all!
Are you happy with the Autumn Statement announcement? Join in the debate on Twitter – @GorillaAccounts.
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