Orange & Gold Blog

Budget Changes for Contractors and Self-Employed Professionals

 

We've recently blogged a few of the main, headline items that are going to change, or that we'd like to see in the Chancellor's 2014 Budget tomorrow.

 

However, there are a few items that are more specific to freelance contractors and self-employed workers. These are likely to get lost in the small print, given that they are not 'big news' but are certainly ones to watch out for.

 

IR35
The House of Lords Personal Service Companies Committee may report its findings with or alongside the Budget and it will be interesting to see what their recommendations are in relation to limited company arrangements and whether they suggest any changes to this key piece of legislation for the freelance market, or to its application.

 

False Self-Employment Legislation
Despite significant lobbying from various quarters asking for a delay, HMRC appear determined to bring this legislation forward in April. It is still not clear exactly what form it will take or what the effect it will be, though the consensus is (and this has even been confirmed by HMRC) that the intention is not to impact on genuine limited company contractors (or PAYE umbrella contractors) but rather other forms of employment, disguised as self-employment, particularly in the construction industry. The issue is that HMRCs intentions are not always borne out by the actual wording in the legislation, which can have unintended consequences and we will not really know the impact until the wording has been reviewed in detail. 

 

National Insurance
There has been a suggestion from the back benches that NI should be renamed as an employment tax, with a view to eventually being combined with income tax, as it is no longer ring-fenced and is simply used alongside general tax receipts to fund government spending. However, it is not clear how the employer's element of NI would be dealt with, as this could not just be lumped onto employees as more income tax. It is unlikely that anything as fundamental as this will happen for several years, if at all. However, if it did, it would have an impact on contractors and the Chancellor is rumoured to be interested in the proposals, so it will be interesting to see if it gets a mention.