Budget 2016 – ICS Round Up

Here at ICS we always like to think of the glass as half full as oppose to half empty, and although we know many will see the Budget yesterday as a mixed bag, the budget did offer good news for contractors and freelancers.

We know that public sector contractors will be affected by yesterday’s announcement but this change will only come into force in 12 months’ time. From April 2017 it will become the engagers of contractors with a Personal Service Company (PSC) working within the public sector responsibility to decide the working status of the contractor instead of the contractor themselves.

There are already membership bodies such as IPSE, who sat on the IR35 forum, that have promised to speak on your behalf and work with HMRC to limit any potential harm the latest actions may cause to freelancers, contractors and the self-employed in the public sector.

Despite the above dominating headlines, there were many positive moves made by George Osborne which we’ve summarised below;

  • The new threshold for rate relief will increase to £15,000 from £6,000, meaning that from April next year, around 600,000 small businesses will pay no business rates.
  • Class 2 NIC being scrapped for the self-employed.
  • From April 2017, the tax-free personal allowance will rise to £11,500, and the 40% tax threshold will rise from £42,385 to £45,000.
  • Capital gains tax is also to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers.
  • By April 2020, corporation tax, which is currently 20%, will fall to 17%.
  • Oil and gas tax rates are to be reduced will also affect the many contractors who work in that industry.

With an increasing trend of people choosing to become contractors and freelancers, you don’t need to feel like you’re going it alone. There are membership bodies out there specifically supporting flexible workers and accountancy firms like ICS, which are here to help you with your finances and ensure you remain compliant in a fairly complex and changing tax landscape.

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