Categorized | alan's blog, tax avoidance

Budget? What Budget?

Budget? What Budget?

There was quite a lot of minor change in the Budget, and we should praise the intention to focus on helping businesses with a raft of measures, but for us one man consultancy companies there was actually nothing of very much interest in there. With VAT, Corporation Tax and allowances all staying the same, there will be almost zero impact on most of us.

A lot of the business friendly things won’t really impact me, of course. I don’t pay business rates since like most freelances I am something of a nomad. I don’t have a lot of capital expenditure so changes in Investment Allowances are immaterial. I welcome the intention to increase access to HMG contracts by 15%, but that’s not happening until the end of 2010.

So all in all, something of a non-event.

Unless, of course, you are using one of the more imaginative payment schemes. There is a strong anti-avoidance programme tucked away in the detail – that’s all the things that Darling Alistair doesn’t burden his audience with in the House – some of which will impact some freelance workers. For example, payments via loans will be shut off by the simple expedient of making the loan write-off liable to CT and hence uneconomic. There is a clear message that EBTs in all their forms will be closed off. Add to that some additional international taxation treaties (including one with Belize, stamping ground of Tory donor Lord Ashcroft. Funny, that…) and a re-emphasis of the rules of Double Taxation; clearly some people are going to have to rethink how they manage their money.

And of course, tax allowances have been frozen which is, as Osborne pointed out, just another Labour stealth tax. Darling’s justification made me smile as well. The indexation is based on the previous September’s inflation rate, which just happened to be negative. “Reducing them would be daft” said Alistair. Really? I think it would have been entirely fair, since those are the rules. Heigh ho…

Away from the Budget and there was another major piece of news that, perhaps surprisingly, has gone largely unnoticed. As a result of campaigning by the PCG, there has been a bit of a rethink on the rules surrounding ICT visas. These are the route that some companies are using to bring non-EU workers in to displace more expensive (allegedly) UK workers. The parameters have been significantly tightened, some taxation loopholes closed off and the original Tier 2 split into three distinct classes. The net result is that imported ICT-based labour will be less economical to use, easier to limit and more difficult to bring in.

These changes actually go farther than the PCG was asking for, which was a welcome if slightly surprising result. It is however a vindication of the power of effective lobbying and, incidentally, an indication of how much clout the PCG is beginning to assert. Well done to them, says I.

Of course, like the Budget itself, it remains to be seen exactly how effective these measures prove to be in the real world. But at least the ICT changes have a decent chance of surviving the next election and achieving tier aims, which can’t really be said about Darling Alistair…

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Image: yawn.jpg by Toni Verd

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