Tag Archive | "national insurance contributions"

Nearly 2 Million Pensioners Forced to Fill In Tax Returns


You would think that pensioners could have the luxury of putting their feet up and relaxing once retired. It doesn’t appear to happen that way though.

A recent story by a national newspaper said that 1.7 million pensioners are being forced to fill in a self assessment tax form every year, despite the fact that many of them have not been working for years.

This is highlighted by the fact that 275,000 are over the age of 80, and for some, it’s been nearly 20 years since they last clocked in or ran their own business. Say the words “gig economy” to your average 80 year old and they probably won’t know what you are talking about. .

There are many campaigners out there who claim it is pure “madness” that these pensioners are still having to send off their tax return in the post. For some retirees, it takes hours to get it all right, and some make mistakes that results in fines and penalties.

Take the story of Anne Funnell, aged 83, as an example. She has been doing self assessment for years even though she hasn’t actually worked for an employer in a long time. Unfortunately, it seems she ticked the wrong box on a recent tax return form, which resulted in HMRC sending her a letter which demanded payment.

£5,541 to be exact, which HMRC say is for unpaid National Insurance contributions from between the years of 1978 and 1994.

According to Anne, the letter she received got straight to the point and was not exactly friendly in tone, with demands for “immediate payment” and talk of losing her state pension and benefits if she didn’t send in a cheque.

It was also mentioned that a debt collection agency would be called in if the matter was not resolved.

Who knows exactly what has gone on here, but it does highlight the fact that everybody should hire an accountant to do their tax return and get everything right, even if you are 83 years of age.

All of the 1.7 million pensioners should contact an accountant immediately if you ask me, because the last thing you want is a bill for £5,541 arriving in the post.

A good accountant would make sure the “wrong box” was not accidentally ticked and that the confusing self assessment forms were filled in correctly and on time.

Steve Webb, who is the former pensions minister agrees, and has recently gone on record to question whether or not pensioners should even be taking on the often complicated task of filling in a tax return.

“In very many cases we are talking about very small amounts of money,” he commented, “you are putting people later in life through huge amounts of hassle and stress.”

I don’t think anything is going to change soon though, and this means that nearly 2 million pensioners will have to keep filling in those tax returns.

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Will Self-Employed NICs be Tories Get Out Of Jail Free Card?


So, the Conservative Party swept into power while two thirds of the UK wasn’t looking. But was their promise to freeze income tax, VAT and national insurance the clincher? Or was it the promise of a referendum on EU that Mr Cameron promised (knowing full well we’ll vote to stay in) that bought the keys to Number 10?

In a post like this, I’d be tempted to say, “Well, it doesn’t matter, now. The Tories are in and that’s that.”

The problem is, that isn’t that. At least not as far as taxation goes.

Vultures are waiting for the first sign of a hike in tax

Already, all eyes are waiting for the first sign of a tax increase. The market was truly shocked by the pre-election tax-freeze promise, given how tentative economic recovery is.

Mr Cameron must be as confident in the UK recovery as he was of his continued tenure in Downing Street. He was, after all, the first Prime Minister in an age not to have a bag packed ready to vacate No 10 had things gone horribly wrong last Thursday.

And they could have. Just ask Messrs Farage, Clegg and Miliband (not to mention Balls and Cable) how quickly the political tide can change.

An article in today’s Financial Times hinted at several ways the new government could sneak tax increases in on the blind side. At least in a way that won’t have the electorate calling for Mr Osborne’s head.

The Conservative Party has, as the FT says, “boxed itself in” with the taxes that the average working man pays. They’re frozen for the full term of the next government; any move to the contrary could be political suicide.

But that’s the key: the average working man. At the beginning of this government, there are a lot more unaverage working men and women than ever before.

Are contractors a victim of their own success?

Self-employment has propped up employment figures during the recovery. While growth may have slowed in comparison, freelancers and contractors continue to set up shop for themselves in droves. And this is one of the areas the Treasury could exploit.

Anyone operating through a limited company draws low salary and dividends. It’s an age-old tax planning measure that, when done correctly, offers a considerable (compliant) saving.

The Conservatives may well look at eliminating this ‘preferential treatment’, as the FT puts it. They wouldn’t be increasing NICs, per se. Just making less of it available as tax relief for limited company directors.

Other taxing conundrums for contractors (and their accountants!)

In addition, we already know that certain benefits for umbrella contractors are in jeopardy. There’s still plenty of discussion ahead, as promised. But the 2016 end date of travel and other expenses for ‘managed employees’ looks more certain than ever.

The Tories have given themselves very little room to manoeuvre on tax. As such, the crackdown on evasion and aggressive avoidance will go further than a few expenses.

Couple this with those earning in excess of £150k about to cop for a rise in pension tax and contractors could soon need all the help from their accountants that they can get. Moreso now than ever.

And they say that the Conservatives are the party of free enterprise? Ironic, then, that the freeze on tax for the working man may see entrepreneurs footing the bill.

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Limit red tape to once a term, FSB pleads


If there’s one thing the Government loves it’s red tape – especially when it comes to employment regulations – but the FSB says enough is enough!

The Forum of Small Businesses has decided to go to bat for the entirety of the small business community by telling the Government flat-out that there’s no need to regulate employment law more than once in each parliamentary term. In fact, the FSB says that contractors, limited companies and sole traders all end up paying through the nose due to this red tape to the point that 2013’s regulatory costs to small businesses amounted to something like £14,800 each – or an eye-watering £18.2 billion taken altogether!

Compliance with employment law, especially regulations relating to National Insurance contributions, income tax and issues like IR35 for freelancers, can be incredibly costly. Some £4.7 billion of the entirety of Government compliance costs is strictly employment law, and with the constant changes to the regulations it’s enough to make anyone’s head spin. Of course smaller firms suffer more in situations like this, especially self-employed Brits who regularly feel like they’re flying by the seat of their pants anyhow.

So, do you think the Government will listen? Perhaps not this one but the next? I don’t know; your guess is likely as good as mine. Whatever the decision is, you can’t really deny the fact that the FSB has an absolute fantastic idea, even if it would be a bit on the radical side. Long gaps between regulatory reforms could provide some much-needed relief to many Brits currently suffering under the yoke of confusing or unduly harsh employment regulations, and slowing down the slow encroachment of further regulation to once a parliamentary term could do much to reduce the frustration many self-employed feel. Of course this also means long stretches of time that go by without even a thought to reform of particularly poor legislation and regulations as well, exposing loopholes to be exploited by those less reputable than others. As much as I would hope that there would be no one trying to game a system that only had one opportunity for regulatory review a year I do fear that it would just be abused, much like many regulations are circumvented today. What would change, in the end?

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Possible NIC cuts for new businesses


If you’re looking for proof positive that Her Majesty’s Revenue & Customs isn’t all bad – and in fact does come up with some helpful ideas – today is the day!

That’s right – it looks like that this April could see a scheme go into effect that changes to the way National Insurance Contributions are handled by new businesses, partly due to the new £2,000 Employment Allowance NIC reduction for all charities and businesses in the UK. The taxman estimates some £5.5 billion could be saved per annum, with the cash going back into firms for expansion and growth.

Honestly I think this is an absolutely brilliant bit of news, and absolutely proves that even though I grouse and whinge about HMRC, sometimes it gets things right – and when it does, it gets things right in a massive way. The tax authority estimates that, out of those firms that will be deemed eligible for the scheme, savings of almost £200 per employee could be seen quite easily.

If anything this could serve to make permanent employees slightly better candidates for a position in comparison to a contract worker. Employers don’t have as heavy a NIC burden when it comes to contractors of course, making the use of interim workers a much better choice for controlling payroll costs – this can sometimes make freelancers the preferred choice for companies, but now with the new Employment Allowance scheme this could serve to level the playing field between traditional employees and contract workers.

However, if you ask me I don’t this will impact the balance of power too radically due to the skills shortage. Permanent workers with the requisite expertise for many positions are still a bit thin on the ground, and that means contract workers have been taking up the slack – of course it’s not like the UK’s store of contractors is inexhaustible, as even these stalwart souls can become overextended and end up burning themselves out.

However, with a new focus on employing more traditional employees and saving nearly £200 per employee on NIC responsibilities, could this bold and welcome move from HMRC change the employment landscape? Only time will tell, I’m afraid!

Still, it’s nice to see the taxman does indeed have the best interests of others in mind, despite the bum rap it sometimes gets from me and other critics. Perhaps I’ve been too harsh, eh?

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The great National insurance swindle of 1948.


National insurance, national insurance, national insurance.

Keep saying it to yourself and eventually you begin to ask, what is it and where did it come from? According to the government’s own website:-

You pay national insurance contributions to build up your entitlement to certain state benefits, including the State Pension.

Fair enough, what if I don’t want them?

As I understand it, and I am not a benefits adviser, you don’t get a higher pension or more in jobseekers allowance, if you have paid more in national insurance. So how is it an insurance scheme and what I am insured against? For example, if you take out life insurance policy and pay a monthly premium, you get a higher pay-out (if you die) dependent upon the amount of monthly premium you pay. If you like, you are betting you will die before the cessation date and the insurance company are betting you won’t. With national insurance, you pay a monthly amount into a scheme and you are insured against ……. going to work.

This is not what was originally intended by the Act of 1911. Back then, your employer would pay a stamp for your national insurance and keep a card with those stamps on. If you lost your job, or couldn’t work, they would give you your card with the stamps affixed. Hence the terms “paying your stamp” and “given your cards” was part of the language.  You could use the card to claim benefits and they were also often used as proof of employment.

This is no longer the case. Since Attlee changed everything over to the Welfare state in 1948, national insurance has become the stealth bomber of taxes. Ask anyone what the tax rate is and I am certain they will know it is 20% for a basic rate tax payer. Ask them what their personal allowances are and most people can have a good guess at around the £9,000 figure.

So, what are the employees rates for national insurance and how much does your employer pay as a percentage?  Not easy to remember is it.

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UK Uncut to get its day in court on June 13th


Contractor accountants may be interested to learn that UK Uncut, the activist group that is against the government’s spending cuts, has won the right to take HMRC to court over its dealings with Goldman Sachs.

Now referred to as a ‘sweetheart deal’, HMRC let Goldman off paying £10 million in interest on its unpaid taxes back in 2010. The Revenue will now have to defend that move in court.

Last December, Revenue chief Dave Hartnett told a parliamentary committee that the department had gone ahead and struck the deal without consulting lawyers. Furthermore, he admitted that HMRC should have insisted that Goldman Sachs paid interest on the £24 million it owed the taxman after the bank spent years trying to avoid paying National Insurance contributions on the bonuses it paid its UK staff.

Last week, Goldman Sachs posted last quarter profits of £1.32 billion and so far it has made no move to oppose the hearing.

The Revenue has a policy of not commenting on litigation that is ongoing and Goldman Sachs also refused to make any comment when the news of the hearing broke.

A preliminary permission hearing will take place in the high court on the 13th of June. If a whistleblower is to be believed, Goldman could owe the UK taxman nearer to £20 million.

UK Uncut director, Tim Street, said he was delighted that the group was getting the opportunity to present its arguments in court and is looking forward to receiving the judge’s permission for a judicial review into the affair to go ahead.

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Why are new businesses ignoring the employers NICs holiday?


Contractor accountancy firm, Mitchell Charlesworth, has said that several new businesses are failing to capitalise on the National Insurance Contributions holiday set up by the government last year.

When Chancellor George Osborne delivered the coalition’s first budget last June, he introduced a measure whereby new businesses were exempt from paying employers NICs, up to a value of £5,000, on the first 10 workers they employ during their first year in business. By taking advantage of this, a new company could save up to £50,000.

The NIC holiday initiative is available to new firms that set up between the 22nd of June 2010 and the 5th of September 2013.

Paul Durrance from Mitchell Charlesworth said that government sources claim the take up of the scheme has been disappointingly low.

The coalition has now launched StartUp Britain in a bid to provide more support for entrepreneurs and whilst this looks good for the government, there’s a bewildering minefield of information for resource stretched start up firms to absorb, he continued. Unless they possess specialist knowledge, these firms could easily miss the golden nuggets, such as the NICs holiday.

The government is disappointed that so few firms have taken up the NIC holiday so start ups should grab the opportunity while it is available. There are certain conditions that have to be met so start-ups may want to consult a financial expert to check their eligibility. Newly set up companies in London, east England and the Southeast are not entitled to the break and in certain sectors there is a limit on the amount that can be claimed.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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IR35 – a slap in the face? Well, no, not really


My blog for June last year was commenting on the first budget of the new Coalition government. It got a cautious welcome from me – which they no doubt appreciated greatly – and while the overall news wasn’t that wonderful, it at least looked like things were heading in the right direction.

I also mentioned an entry in the Red Book that “was a clear commitment to look hard at IR35. This was backed up by an interview in the Telegraph, where Mark Prisk emphasised the intention to lose IR35 altogether“. On that score for this budget, I have to say close, but no banana.

The Office of Tax Simplification made three suggestions for Mr Osborne; merge PAYE and NICs, either suspend IR35 or greatly improve how it is administered and maybe look at some tests to define who is employed and who is a freelance. Those of us in the “IR35 is the spawn of the devil” camp clearly hoped that suspension would be the result. Sadly, however, it was not to be; IR35 remains in place.

So a bit of a disaster then? Well, no, not really.

Firstly I’m inclined to believe Osborne and Gauke when they say that they could not afford to turn off IR35. Elsewhere in the Budget they confirmed the December 9th announcement regarding the closure of offshore EBTs that are being used to step around paying any taxes at all by many high earners. Without IR35, these guys would simply incorporate and go back to the same old job as a pretend freelance: the classic Friday-to-Monday soft shoe shuffle. With IR35 still there, they can still incorporate if they really want to, but the tax advantage would simply not be worthwhile. Which makes a degree of sense as far as I’m concerned.

Secondly, administration of IR35 is to be improved (I was going to say “greatly improved”, but it could hardly get any worse!). In other words, stop spending tens of thousands on five-year cases that invariably lose and focus instead on the ones where there may be a genuine case to answer – which, on current numbers, is about 3% of them. HMRC aren’t doing this by themselves, they will be talking to the experts on contracting who will be very clear that the net will be focused and not widened. HMG have invited PCG to be a key player in this, and for one I’m reasonably certain PCG won’t let anything through HMRC’s clutches that makes things worse for the genuine freelance.

Finally Osborne is now looking to merge PAYE and NICs. As I said last week this is a very difficult thing to achieve, but at least we have a chancellor willing to take it on. That means that if this can be made to happen, IR35 ceases to have any purpose anyway

The rest of the budget was, I thought, probably about as good as it could be given the starting position. OK, so Osborne has done a smoke and mirrors job by changing how inflation is measured and people who understand the Oil and Gas industry far better than I do are seriously dischuffed about the raid on their profits to fund the fuel equaliser, but the intent is sound.

So not the result we hoped for, nor even the result we would have quite liked, but at least we are still in there and having a direct say on how we are to be taxed. This is, despite the cries of outrage from the hard of thinking, no small achievement. PCG and Chairman Chris Bryce have done a seriously significant piece of work via the OTS and should be praised for it.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited<

Image: The Small Hand that Kills (41th/52) by skippyjon

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Drivers of supercars set to pay more income tax


HMRC is going to start targeting supercars in April and executive high flying accountants for contractors will feel the pinch as benefit in kind payments on company cars will increase significantly.

New regulations coming into force on April 6th will see the maximum list price of £80,000 abolished. This will affect the P11D tax which is paid on company cars such as Bentleys, Ferraris, Lamborghinis and top of the range BMWs and Mercedes.

Under the current system, the maximum income tax paid on a company car is £14,000 pa and the maximum national insurance contribution is £3,584.

The increase in tax will mean that an executive with a 199mph company Ferrari 612, which has a list price of about £222,000, will have to pay income tax of nearly £39,000 a year and the employer will pay more than £10,000 a year in Class 1A National Insurance.

And drivers shouldn’t think they can get out of paying this increase by buying a used car. HMRC will charge them on the list price of a new vehicle.

David Heaton from Baker Tilly, said that when Alistair Darling introduced the legislation in 2009 it was to ensure drivers paid fair levels of tax, but as a result companies will probably stop buying supercars.

Very rich executives may not be too concerned about paying the additional tax but drivers of older company cars could get caught out. For example, a 2005 Ferrari 612 Scaglietti can be got for around £65,000, but if it’s used as company car, the tax will be worked out on the list price of £177,000, giving a tax and NIC of £39,500 a year.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Mind The Cyclist by Nanagyei – Still has some catching up to do..

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IR35, EBTs and the tenacity of HMRC


Just like buses, two cases of interest to freelances concluded this week. After seven years, a contractor named Mark Fitzpatrick has been found to be outside IR35 by a Tier 1 Tribunal. And another imaginative scheme to avoid paying taxes has been found to be not exactly effective.

The IR35 appeal has been rumbling on since 2009, when an appeal was lodged against earlier claims relating to contracts dating from 2001, 2003 and 2006. They involved work Mr Fitzpatrick was doing for Airbus since setting up his limited company in 1996 (same year as me, coincidentally). The details of the case are the usual deeply argued and complex analysis of the facts, but the end result was mainly that because Mr Fitzpatrick’s contractual arrangements failed to demonstrate mutuality he was not in the scope of IR35.

The reasons given for this conclusion are, to the informed reader, blindingly obvious. Mr Fitzpatrick (and others) had been sent home without pay when their IT systems failed and they could not do any meaningful work. Also Airbus could cancel Mr Fitzpatrick’s company’s contract at any time without notice.

The attentive reader may recall me raising this issue of no notice in the past. I’ve long argued that while some week’s notice on both sides may be commercially advantageous, any notice period implies you may be paid for work when there is no work to be done – else why has your contract been terminated?

Still it this is HMRC we are talking about: taking three years to decide a clearly un-winnable case is winnable and another three to discover what any half-informed contractor could have explained in a few minutes is a mere bagatelle.

The other worrying part of this case perhaps warrants wider examination. On of the witness’s evidence was dismissed by the Judge, for several reasons, one of which was that it appeared to have been prepared for him by HMRC. So not exactly impartial evidence then….

The other case concerned a company called Aberdeen Asset Management, who had contrived a scheme to save a few million pounds of tax and NICs for its directors. The judge in that case carefully and completely destroyed their case in a 10-point judgement.

Looking at the detail of the case it was clear that it was perhaps doomed to failure. It was not an EBT – although an EBT was part of the daisy chain of intermediate companies and itself paid out to some 400 other people (who presumably are now looking over their shoulders) – and was benefiting its own employees rather than any third parties, so shouts of glee from other scheme providers that this was nothing to do with the ongoing arguments about contractors using EBTs and set no precedents were to be expected.

Except for two small details. Firstly, that HMRC are clearly aiming to shut down any and all schemes that they perceive to be artificially created in order solely to avoid taxation. Secondly, as the Aberdeen Asset case proves, HMRC are not bothered how long it takes to get its tax back, but get its tax back it certainly will. And if you have to sell the house and the children to pay it, well tough but them’s the rules.

All of which leads to an interesting dichotomy. On one hand we have HMRC pursuing a case that was clearly un-winnable for 10 years, costing several tens of thousands and recovering absolutely nothing beyond egg on their collective face. On the other we have HMRC spending ten years to pursue a case against a scheme that was clearly never going to fly and eventually regaining a few millions in unpaid taxes.

Such tenacity is to be admired, in a way. But such a shame that HMRC lacks the wit to work out which case to spend ten years on in the first place.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited<

Image: Rosie by Chris Barber

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If it ain’t broke…


Don’t fix it, goes the old cliché. But how about if it is broke, don’t fix it either? Why not simply get rid of it?

Now the Office of Tax Simplification is up and running, many bodies have been making their submissions on how they think things should be changed. And needless to say the abortion that is IR35 comes in for a lot of debate. Which is nice.

However I am struck by the fact that almost all that debate is centred around how it could be made to work better. Make it more fair, make when it applies a lot more clear, make it more of a level playing field. No, says I, you don’t want to do that…

Let’s think about why we have IR35 at all. If you work through a Limited Company, you gain certain advantages in how you convert gross into personal income. This means that it is not all that difficult to switch from employment to freelancing, trading through a limited Company that has no other purpose than to save you tax and NICs.

This, clearly, is a bad thing. Especially if you are an unimaginative MP from South Bristol well known locally for an inability not to jump on bandwagons.

So in comes IR35, which is not meant to stop people switching from employment to freelancing but simply to make sure that they pay the same tax as those who chose to stay as wage slaves. OK, it is a model of NL legislation, poorly conceived, poorly drafted, utterly incomprehensible and all in all about as effective as a chocolate fireguard.

But, and it’s a big but, nobody is asking why we have to work through limited companies. So rather than fix IR35, let’s fix the root cause. Which is the legislation that makes the intermediary company liable for any unpaid taxes. Which is why we have small companies. Which is why we have IR35.

So, change the law slightly so that the worker, not any other intermediary, is liable for their unpaid taxes. Then agencies can use sole traders, a status that has a recognised legal framework. It means no more debate about the nonsensical 24 month rule on expenses. You can be registered for VAT, you get working expenses and you can ignore those people who say you are only pretending to be a business. If you want a limited company you can have one: but if all you do with it is move its income to your bank account, be prepared for HMRC to declare it a sham. Hire people, reinvest income in growth, build a list of assets, then no problem.

Is that not a simple solution?

Incidentally, the members of the OTS have been announced. Number 6 in that list is one Christopher Bryce who, as you may know, is current chairman of the PCG. His being there is not only a huge endorsement of PCG’s ten year struggle for recognition but a major step forward in the fight to get rid of IR35 altogether.

Let’s hope he reads this blog…

Alan Watts can found at LinkedIn.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Should online accountants be worried about PAYE reform?


Last Thursday, the REC responded to HMRC’s discussion paper on plans for streamlining the PAYE processes.

The Revenue wants to reduce the cost of administering PAYE for businesses and the government and at the same time reduce the number of incorrect tax deductions.

The main suggestion under consideration is to migrate employee tax details to a centralised account and introduce Real Time Information so that employers can submit income tax and NICs deduction details each time an employee is paid.

Eventually HMRC would like to introduce centralised deductions. Employers would use an electronic payment system to submit gross pay to the Revenue. They would calculate the deductions and automatically credit the employee’s bank account with the resulting net pay.

REC Policy Advisor, Chris Richards, said that recruiters would welcome any reduction in bureaucracy but warned that the public sector has had problems with large scale IT projects in the past and so each stage would need proper evaluation and implementation spread over realistic timescales.

Another change that is being questioned by the FCSA involves the abolition of year-end tax adjustments. HMRC has said they favour a system whereby information is updated when somebody changes employment.

However, the FCSA says that implementing and maintaining such a system might be extremely costly. It is also concerned that the storage of all the additional information might leave the Revenue open to a data security breach.

Matthew Sinclair from the Taxpayers’ Alliance is horrified by the idea of a centralised deductions scheme. He points out that people wouldn’t get a payslip and would need to check online to see how much tax they had paid. However, he thinks many people wouldn’t actually check and more mistakes would go undetected.

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Contractors should brace themselves for further tax rises


According to Howard Archer, chief European and UK economist at IHS Global Insight, last week’s Pre-Budget Report was merely a “stopgap” and that further increases in tax and cuts in government spending are likely in 2010. This view is shared by several leading contractor accountants.

It’s no surprise that the size of the UK’s debt is a major concern for the Bank of England, who say that the current AAA credit rating could be at risk. Mr Archer agrees, but has suggested that it’s “probably” safe until next year’s general election.

He further added that “the rating agencies and the markets will be looking for early and decisive action and indications from the new government about exactly how they intend to bring the budget deficit down.”

There are two ways this can be achieved. Either through reducing government spending or raising taxes. The chancellor has already announced a series of tax changes in his Pre-Budget Report, which included a 0.5 per cent rise on National Insurance Contributions from 2011 and the reinstatement of the 17.5 per cent VAT rate from 1st January 2010.

The good news for many limited company contractors is that the planned 1p corporation tax increase for smaller companies has been delayed until 2011/12. It is thought that this is mainly due to government fears that increasing taxes now would suppress the UK’s economic recovery. There is no change to the IR35 Rules or Family Business Tax.

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