Somethings you might like to know....
On the surface Alistair Darling’s budget appears relatively “harmless”. However as a contractor there are a few key points, which you might like to be aware of:
Income Tax Rates & Allowances
As most people will have noted by now yesterdays budget saw the introduction of a new 50% rate of tax for those earning over £150,000. In addition the Government are also planning to remove the personal allowance (the amount you can earn before you pay tax) for those whose earnings exceed £112,500 and this will be done on a sliding scale so anyone earning in excess of £100,000 per annum will be affected. Both of these changes are due to take effect from April 2010 and signal the beginning of a far more hazardous tax landscape for the UK’s higher earners.
Pensions
On top of this the Government will also be restricting pension relief to 20% for those with incomes in excess of £150,000 and to further rub salt in to the wounds will be launching anti-avoidance rules to stop individuals making large contributions to their pensions to compensate before the legislation takes effect in April 2011.
Income shifting
From an Income Tax perspective there is one piece of good news as the Government have restated their position on Income shifting, the practice – in Government eyes - of shifting the income of one business partner to another to reduce the tax burden, and confirmed that no legislation will be launched in the foreseeable future, however they have made it known that they will keep this under review meaning the likelihood is that this isn’t the last we will be hearing of this.
VAT rates
As we all know in December 2008 the VAT rate was reduced to 15% in a bid to get us all spending again however this was only ever a temporary fix and the Government have confirmed that from the 1st January 2010 the standard rate of VAT will revert to 17.5% just in time for the January sales.
Final thoughts
One other interesting point, which came out of yesterday’s budget, is the Government’s obvious desire to extend HMRC’s powers and allow them to pursue those who they deem to be cheating the system, with a new level of ferocity. Measures announced include a New Disclosure opportunity for those with off shore bank accounts giving holders the chance to disclose, of their own accord, if they owe HMRC money and in addition HMRC are also likely to be given powers to name and shame individuals who are deemed to have deliberately understated tax in excess of £25,000.
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Budget 2009 - What does it mean for contractors?"
Collapse
-
Originally posted by GardenGirl View PostI'm no economist but it seems to me that this government needs some common sense. If you tax people 50% of their income plus NI they will earn less than the Government get in taxes. Who would accept a job at those terms? And thats not the only common sense lacking.
Leave a comment:
-
They showed Dennis Healy on the TV last night and his 'sparkle in the eye' promise to come after the better off. Back then they made no bones about their dislike for anyone getting on and I suspect they will not worry about demonstrating so now. They think it's a vote winner with their core supporters, however NewLabour have disenfranchised those guys in their attempt to court the 'middle classes'. It's going to get awfully messy from now on and I would suggest an early GE might be his best course of action, save a reasonable number of seats at least.
Leave a comment:
-
Originally posted by Mich the Tester View PostIsn't this all a bit theoretical if the end result is economic armageddon and Labour holding up a begging bowl at the IMF?
Leave a comment:
-
Isn't this all a bit theoretical if the end result is economic armageddon and Labour holding up a begging bowl at the IMF?
Leave a comment:
-
Originally posted by TazMaN View PostHe's right, and you know it.
FBT/Income splitting is still deferred - winner
50% tax on >£150K only affects those who are IR35 caught or using a brolly though laziness.
Reduced tax relief on pensions for earners over £100K - see above plus those who are stashing masses away as they're due for retirement shortly.
People using dodgy overseas loan schemes - Well, this was already happening with BN66(?) etc
It could have been much worse IMHO.
This won't affect "employers" use of contractors.
My £0.02
Leave a comment:
-
Originally posted by motoukenin View PostList of post budget consequences:
1) Contractors using Umbrella Companies or similar "Loan" avoidance ideas will get bashed with the treasury baseball bat until every last penny falls out their pockets
2) Limited companies with one employer will get a letter inviting you to personal interviews with the intention of finding you IR35 compliant , any legal challange will be met by replacing previous fair minded judges of compliance cases with "Your guilty" rubber stamping admin staff.
3) Employers will be even more frightened to take on contractors with even more red tape from HMRC.
4) Not only will you have to deal with desperate drug infused junkies stabbing you for 10 quid in your wallet when you get on a bus (if you have 10 quid left) but your also going to have a similar experience from desperate and equaly dangerous tax officials (ok so they wont stab you but you might just see them putting your house up for sale and carting all your assets down to the local auction , similar effect) , thoes that "collect" the most money will be given incentives.
My advice is to lease everything and put all your money in a foriegn bank , that way if you do get "selected" then you can at least go abroad and start again.
Thought I would just tell it how it is , have a nice day.
He's right, and you know it.
Leave a comment:
-
Originally posted by AtW View PostIt's possible, depends how HMRC writes the rules, perhaps they'd require owner who buys new car with this discount to own new car for another year, but even that is not fool proof - £2k is not a lot of money, but it's bound to create a market for buy/sell banger schemes.
Leave a comment:
-
Originally posted by SantaClaus View PostLooks like its a 50% tax on 100K earners. Combine that with NI and there will be a drain brain. Who wants to give more money to the govt. than they get themselves?
Leave a comment:
-
What the budget will do
List of post budget consequences:
1) Contractors using Umbrella Companies or similar "Loan" avoidance ideas will get bashed with the treasury baseball bat until every last penny falls out their pockets
2) Limited companies with one employer will get a letter inviting you to personal interviews with the intention of finding you IR35 compliant , any legal challange will be met by replacing previous fair minded judges of compliance cases with "Your guilty" rubber stamping admin staff.
3) Employers will be even more frightened to take on contractors with even more red tape from HMRC.
4) Not only will you have to deal with desperate drug infused junkies stabbing you for 10 quid in your wallet when you get on a bus (if you have 10 quid left) but your also going to have a similar experience from desperate and equaly dangerous tax officials (ok so they wont stab you but you might just see them putting your house up for sale and carting all your assets down to the local auction , similar effect) , thoes that "collect" the most money will be given incentives.
My advice is to lease everything and put all your money in a foriegn bank , that way if you do get "selected" then you can at least go abroad and start again.
Thought I would just tell it how it is , have a nice day.
Leave a comment:
-
Originally posted by snaw View PostWow, you really think so?
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: