The Official Budget 2016 thread

[koalah]

None of their examples make any sense in simplifying! They are going to have to work out complex credits systems, and if you contract in a tax year with multiple agencies, that's more paperwork to process. Also, effectively if the agency has to pay the tax and NI, that's making them an umbrella company, so who is liable to pay the new company pension rules?
All it might start to mean is that less and less agencies want to work with the public sector, or they will transform into umbrella companies and therefore loads of PSCs will shut down. Build up the money in the next 12 months and then make yourself redundant with a £30K tax free lump sum perhaps?
As an 'off-payroll' contractor working in public sector, this all makes me laugh, because they will spend what they intend to reap from the crack-down on consultation, working out the calculator and paying more people to process all the extra calculations admin come end of tax year. They pay me to tell them how they can make things more efficient in IT and then they go and create more work for themselves....

[Bluenose]

So personal allowance up, income tax down and corporation tax down... weren't contractors whinging last year?

I await the summary email from my accountant with baited breath.

[DimPrawn]

Who cares.

Get on with invoicing, let the accountants / tax advisors figure out all the ever complicated and conflicting bollox. They can work out the best way to operate as the rules change.

Tories, party of tax simplification my arse.

If there's loopholes, use them, if not, adapt.

That's my last word on this gidiot budget.

[BlueSharp]

Grace’s PSC invoices the Ministry monthly for £2400, which includes £400 VAT. The
Ministry treats £2000 as Grace’s earnings and deducts £223 tax and £159 employee NICs,
which it pays to HMRC via RTI with £183 employer NICs. The Ministry pays Grace’s
company £1618.

So if the public sector client/agency decide the 'rules' apply they can pay your company less money and not honour the invoice.

I would assume that they would have to honer the invoice and deduct the relevant tax as well, resulting in a lower day rate. There was no mention of how Flat Rate VAT would work either.

[DaveB]

Would that £1618 then be subject to CT?! How can an entity be taxed as both a company (VAT) and a person?!

And where did the VAT go?

[MarkT]

Public sector details here - separate document...

https://www.gov.uk/government/public...es-legislation


Edit: Or wot jamesbrown said. (KUATB)

According to that document, a "contractor" is a business, anyone else is "Off payroll" and an employee. They are opening themselves up to all sorts of claims for holiday and sick pack if they go down this route.

I note that after the PAYE, you still have to pay corporation tax!!

[DimPrawn]

[bobspud]

And where did the VAT go?

Well thats the interesting thing if you worked at HMRC on one of their projects and they pulled this stunt, You would have to invoke legal proceedings against the government for non payment of the VAT component of your legally issued invoice... Remember that you have a legal contract in place that confirms day rate and VAT to be paid for services...

You would win and then you could send the bailiffs into clear out the head of HMRC's office for non payment of moneys that is also owned to them..

You could not make it up

[jamesbrown]

According to that document, a "contractor" is a business, anyone else is "Off payroll" and an employee. They are opening themselves up to all sorts of claims for holiday and sick pack if they go down this route.

I note that after the PAYE, you still have to pay corporation tax!!

No you don't. They explicitly mention that double-taxation will not occur, as they will provide an allowance for all PAYE/NI paid upfront. So you'll be able to extract all income without CT. I suppose, in principle, if you retained profit, that would be subject to CT (depending on carry forward rules), but no one in their right mind would do that.

[suityou01]

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.

Did I miss something, I thought that one didn't go through?