George Osborne’s Budget 2015 offers a mixed bag with penalties and benefits for contractors throughout.
The majority of measures will in fact benefit contractors, especially those with savings in the bank but excluding those who target expenses from umbrella companies.
The Chancellor claimed in his budget speech this afternoon that Britain is again paying it’s way with job growth on the up, with the added signal that “We choose to use whatever additional resources we have to get the deficit and debt falling”.
On a less than positive note, tax avoidance is still a major on going focus that is meant to: “Stop employment intermediaries abusing the tax system,” by means of “clamping down on agencies and umbrella companies who have abused tax reliefs for expenses”, according to Chancellor George Osborne.
Budget 2015 : How does it affect contractors?
There are various points worth noting now the Budget 2015 has been announced. For starters, self-assessment tax returns are to be eliminated with online tax accounts taking their place. Tax relief on pension pots is to fall from £1.25 million to £1 million (however, will be indexed from 2018 to protect those already in place) with umbrella companies and payroll agencies expenses to be targeted for tax avoidance measures.
Personal allowances will rise to £11k by the time 2017 rolls around, yet no equal increase parallel to NIC’s (National Insurance Contributions) thresholds. The higher rate will increase to £43,000.
A highly flexible ISA is on its way to be introduced, no longer penalising those who have saved and withdrawn and then replaced the funds in the same year. Entrepreneur’s relief will go through changes that could impact on how contractors can go about extracting cash in an efficient manner from their limited company.
A new personal saving allowance is to be introduced; ensuring the first one thousand pounds of savings income will not be taxed, while those contractors starting on the housing ladder can gain £50 per £200 saved thanks to a new ‘Help to Buy ISA’ from Budget 2015.
Tax advisors and contractor accountants will now be subject to anti-tax avoidance legislation with tax credits for film, television and gaming to support contractors in IT and freelancers working within the UK’s creative sector.
Contractors in the oil and gas sector will soon benefit from a wide range of measures on tax tailored to get production and exploration of the North Sea booming.
Finally, alcohol and fuel duties are being either cut or frozen.
Budget 2015: Oil and Gas
Contractors within the gas and oil industry can look forward to significantly improved prospects. Osborne claimed: “The fall in the oil price poses a pressing danger to the future of our oil industry if we don’t take action.”
As a direct result, revenue on petrol will drop to 35% from the outrageous 50% it currently resides at. This is to rouse production from older oil fields with a single investment allowance to be introduced from next month; the Conservative Government will capitalise in seismic surveys over areas yet under explored.