The Autumn Budget 2017 sent a mixed message to contractors, as the Government arguably took one step closer to extending the harsh public sector IR35 reforms into the private sector. There were no immediate tax hikes that contractors have gotten used to in recent years. Instead, the Chancellor announced a series of consultations and discussion documents, which may well suggest Government is beginning to listen to the flexible working market regarding certain issues. Consultation announced into IR35 in the private sector The biggest news for contractors was the anticipated consultation into IR3 ..read more

The freelance sector are waiting for Mr Hammond to prepare his Budget on November 22nd.  The IR35 reforms that came into effect in the public sector in April are being indicated to be rolled out into the private sector as soon April 2018.  Despite the devastation that the changes caused the public sector, particularly the NHS. There are numerous arguments opposing a private sector rollout, but many worrying signs that it might be inevitable. Reasons why the IR35 reforms may hit the private sector A two-tiered system is crippling: contractors say they won’t work in the public sector ..read more

The Office of Tax Simplification (OTS) recommendations for the VAT system and concludes that reform is needed, but the Chancellor must proceed with care. Don’t stress There has been conversation that the Chancellor could slash the VAT registration threshold from £85,000 to £26,000 in his November Budget, bringing an extra one million businesses into the VAT net.  This was following the publication of the OTS report “VAT: routes to simplification” though it is unlikely happen as the report shows that this is not what the OTS has recommended. Frozen thresholds The OTS report considered many ..read more

The International Monetary Fund (IMF) says that some wealthy countries could raise top rates of income tax without harming economic performance.  A new report from the IMF looks at what governments can do about inequality. The IMF argues that government spending and tax policies play an important role in determining the level of inequality, which has increased in developed economies in recent decades. In those countries, what it calls “redistributive fiscal policies” – tax and spending can make substantial differences reducing on average inequality by a third.  Spending policies incl ..read more

Matthew Taylor, the author of the Taylor Review on the gig economy, cautioned MPs against sudden changes to on-demand working. Taylor was commissioned by Theresa May to investigate the working conditions of the gig economy. In the highly anticipated report, Taylor recommended that gig economy workers to be classified as “dependent contractors”. The new framework is to cater for the casual nature of gig economy work. These dependent contractors would not be employees, but they wouldn’t be genuinely self-employed, either. The new category would be entitled to a more limited set of workers’ right ..read more

In April, there was a major change to the income tax rules for landlords.  Tax relief is now going to be restricted to basic rate only, with the changes phased in over four years.  Individual circumstances on the restriction could produce high effective tax rates. The restriction will not apply to companies, prompting landlords to question whether it might be better to incorporate their property business. Tax on incorporation If existing residential properties are transferred into a company: This will be treated as a market value disposal for CGT purposes CGT will be charged at high ..read more

It has been widely reported that the MP Nicky Morgan, who is  chair of the Treasury Select Committee, has written to HMRC’s Chief Executive to take him to task over problems with the new Childcare Service. This appears to be in anticipation of consideration by the TSC. Parents are unable to access their digital services account, along with childcare providers; and there are also apparently “technical difficulties” when frustrated users try to telephone HMRC’s dedicated helpline. Questions of HMRC include: The number of users who have successfully completed an application for a Childcare ..read more

On 13th July 2017, the government announced a new timetable and changes to the implementation of Making Tax Digital which will now take effect in April 2019 and will only be mandatory for businesses over the VAT threshold. New timetable and focus on VAT Under the new timetable: only businesses with turnover above the VAT threshold (currently £85,000) must keep digital records and only for VAT purposes they will need to do so from April 2019 businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020 Businesses with turnover below the ..read more

The cloud is much more secure than it seems, with 85% of businesses having a multi-cloud strategy trusting these services with their own and their clients most sensitive data. Understandably people are cautious about putting business’s and clients’ data on the internet, as essentially it is a publicly accessible network. Business-class cloud services are working around this limitation with encryption as 60% of businesses believe it is the best way to secure data in the cloud. Cloud security concerns 84% of businesses aren’t happy with traditional security tools when it comes to safe guarding ..read more

The criteria for filing a self assessment tax return been updated and for 2016/17 a return is required where: your income from savings or investments was £10,000 or more before tax your income from share dividends was £10,000 or more before tax According to ICAEW, it begs the question about the process for those who have income from dividends and or interest which is below these limits but on which tax is due (eg, because the income exceeds the personal savings allowance/dividend nil rate band). The information on gov.uk is incomplete on this point. Untaxed income below the thresholds for se ..read more