The Official Budget 2016 thread

[quickweb]

That was until today, now you are going to have to pay full PAYE and NI.

No; the whole point of what they tested for was whether I would be classed as a PSC or not. Considering I can pay someone else to do this for me, or send a replacement in that I pay for, it's not reliant on ME, but on my company fulfilling the contract.

[TheCyclingProgrammer]

cut the higher rate of Capital Gains Tax from 28% to 20% and the basic rate from 18% to 10% from April 2016 (except for residential property and carried interest), and extend entrepreneurs’ relief to long term investors in unlisted companies

So its not going anywhere...yet.

[mudskipper]

Off payroll engagement in public sector - p43

[jamesbrown]

From the Red Book (p. 43):

Budget 2016 43
Off-payroll engagement in the public sector
1.148 Some individuals who work through their own limited company are undertaking jobs
that would ordinarily mean they are employees of the business that they are working for. In
those circumstances, existing legislation on off-payroll working requires them to pay broadly
the same taxes as employees. However, non-compliance with these rules is costing the taxpayer
around £440 million a year – and these costs are rising.113
1.149 Public sector bodies have a responsibility to taxpayers to ensure that the people working
for them are paying the right tax. From April 2017, where the public sector engages an
off-payroll worker through their own limited company, that body (or the recruiting
agency if the public sector body engages through one) will become responsible
for determining whether the rules should apply, and for paying the right tax. This
strengthens the public sector’s role in ensuring that the workers it engages comply with the
rules.
1.150 The government also recognises that the current rules are seen as complex and can
create uncertainty. It will therefore consult on a simpler set of tests and online tools

[jamesbrown]

In other words, an ESI tool for public sector engagers, to be rolled out to the private sector some time later (possibly later than 2017 though).

[quickweb]

so nothing for another year, and even then it depends on what the rules are going to be.

[mudskipper]

Still a year's grace though

[jamesbrown]

p. 85 Off-payroll working: transfer liability to
public sector employers (2016-17 until 2020-21)

Tax 0 +265 +65 +105 +120

Seems unlikely. Odd pattern too.

[jaffab]

Sad and Worried

This budget has made me pretty depressed. The majority of my work comes from public organisation (local Gov and the NHS). Of my annual income, 80% comes from freelancing (not via an agent, for a ‘system’ based delivery billed at the end for a product, rather than on their site at a day rate) and about 20% comes from contracting (normally on site, using my own equipment, where my time is my own but through an agent). Not sure where the PSC snipping leaves me in terms of both the freelance work and the contracting work.

I guess like most people here, I pay myself a wage as a mix of PAYE and dividends. But if I have to move to a fully PAYE pay solution, and with the removal of T&S from April, I don’t see how I could get a day rate that will cover everything and still make my company a modest profit.

I would imagine when this all comes out to play, even those in private sector will be hit by this… even though they are not directly targeted, these will be contractors who shift from public to private sector due to this, and the fact that maybe less public sector organisations would be happy to take contractors.

[TheCyclingProgrammer]

As I guessed earlier...

Budget 2016 announces an increase in the rate of tax payable by close companies under the loans to participators rules so that it continues to mirror the higher rate of dividend tax. The loans to participators tax rate will be increased from 25% to 32.5% in April 2016, with effect for loans, advances and arrangements made on or after 6 April 2016.

Closing a loophole before anyone spots it. An increase in the s455 amount, so not an issue unless you plan to use loans as a tax avoidance scheme.