IR35
“This was the first Budget since October 2018, and in large, there were no real surprises for contractors. The off-payroll reforms were not mentioned, suggesting IR35 is being pushed forward despite industry protests and the ongoing inquiry by the House of Lords.
“While this may not have been the result many contractors were hoping for, it does reaffirm the Government’s stance on IR35. Those businesses that were waiting on the Budget before starting their preparations have been left with very little time.
“Moving forward, accurate status determinations will be essential, so end hirers must prove that they are exercising a reasonable duty of care when making decisions. HMRC has made it clear that blanket determinations do not constitute this. There remains a concern that some businesses may choose to move away from engaging PSCs, but this could limit access to skilled workers and cause further problems.
“It’s a confusing time for the contracting industry, but the UK’s contingent workforce plays a critical role in the UK economy and, with Brexit and the current Coronavirus crisis, these workers are more imperative than ever before.’’
National Insurance threshold
“The chancellor confirmed plans an increase the threshold for employee’s national insurance contributions to £9,500 from 6th April 2020, with plans to ultimately increase this to £12,500. This rise is extremely welcomed by both contractors and PAYE employees. The confirmation that this will not affect access to state pensions should also alleviate worries for those fearing the tax break could have financial implications in later life.
“This move, which will help more than 31 million people save money, demonstrates the Government’s commitment to helping all workers, particularly those on the lowest incomes, and it’s great to see contractors included in this.”
Entrepreneur’s Relief
“It’s good to see that the cutbacks to Entrepreneur’s Relief, where the lifetime limit has decreased from £10million to £1million, will not affect 80% of business owners. This was a bold, yet fair move from Rishi Sunak that supports smaller business owners.
“Despite coming under fire recently, Entrepreneur’s Relief could prove extremely useful to many contractors in the coming months, particularly as IR35 may force some limited company owners to liquidate their businesses and choose an umbrella employment solution.
“Where this is the case, contractors will still be able to benefit from this highly tax-efficient way of liquidating their business and extracting the remaining funds.”
Use of Home as Office Claim
“While not referenced in the budget speech itself, the government today also confirmed that it will increase the flat rate claim for working from home from April 2020, with the documents confirming that the flat rate will increase from £4 per week to £6 per week. This is a positive announcement for many contractors.”