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This is G&D so no politics, that's for the BP. Thought it might be useful to create a thread where members can post FYIs or ask questions as there is quite a lot to take in.
To kick off I thought it might be useful to point out that one of the takeaways of today's budget was that IR35 will be repealed from April. There are a few contractors on the forums so if you aren't already aware then hopefully the heads up is useful.
One point of interest was the re-introduction of “tax free” shopping for foreigners back into shops - “as soon as possible”. Maybe the tax free shopping discounts will come back to the airports.
Not gonna happen… but I guess you already knew that.Quote:
Originally Posted by ryanb741
I wonder what the reasoning is for reversal of the IR35 'onus' is?
Is it simply the big corporations wanting to put the liability back on the sub-contractors who could well avoid HMRC scrutiny, or not have the assets to claim against if they are proven to not qualify for Ltd Co employment?
Or - have too many people in (say) 55+ age bracket simply stopped working when forced inside IR35?
What’s IR35?
All of that I imagine. The market for perm and contractors in finance is crazy and has been for a year or so now. Many contractors went permanent, many went abroad and many retired. I am sure this will result in many coming back to work. It also resulted in many smaller accountancy firms winding up.Quote:
Originally Posted by blackal
An attempt to prevent contractors / consultants doing the role of a permanent employee & paying lower tax for effectively doing what should be a PAYE employee role.Quote:
Originally Posted by Wolfie
I did it for 3 years and went permanent with the changes as my work was not ‘project’ based and was effectively covering vacancies on a fixed term contract.
The changes meant I would need to be set up as PAYE and neither the company using my services, or myself wanted the financial burden - my daily rate would have increased significantly to cover the difference.
Also a fairly vague assessment process to be fair so easy to get caught out. Simple things such as using your own equipment, where an IT department would not allow you to connect to their network etc.
Indeed supervision and control was the main thing used to determine status. I am pleased this is being reversed. Projects (where I work) need flexible staffing to function. Being inside gives the contractor all the risk and tax and none of the benefits of being permeant.Quote:
Originally Posted by Mj2k
For the majority of contractors, the dayrate was not increased, in fact - it was ravaged. That is why so many (I think) - wrapped it in.Quote:
Originally Posted by Mj2k
It was indeed reduced for most. It returned to where it was prior to IR35 and probably £50/day better than that but seems to have settled back to where it was originally.Quote:
Originally Posted by blackal
The business I am working for offered me a perm role a number of times but said they expected a 3-5 year commitment and I personally didn’t want to do that.
Does the individual who is supplying the service have to be a limited company for this to be applicable, ie sole traders etc are not effected?
Due to income received the only suitable vehicle is a limited company.Quote:
Originally Posted by Franky Four Fingers
Source: an email from Standard Life.
Key changes from the 2022 mini-budget:
Chancellor Kwasi Kwarteng has announced a cut to basic-rate and the removal of additional-rate income tax from April 2023 for most of the UK.
The April increase in National Insurance (NI) contributions will be reversed from November.
The threshold for stamp duty has been raised to £250,000 and £425,000 for first-time buyers.
He reconfirmed the energy price cap of £2,500 for the average household, which was announced earlier this month.
Tighter rules for those receiving Universal Credit.
What are the changes to income tax rates and tax-free personal allowances?
Income tax rates
The Chancellor announced that the basic rate of income tax will be reduced from 20% to 19% from April 2023 – a change originally planned for April 2024. He also has announced that the additional-rate of 45% for those earning over £150,000 will be scrapped completely. This means that people with income over £150,000 in 2023/24 will receive the Personal Savings Allowance for the first time. This will be a tax-free band of £500.
Depending on how much you earn, these changes will affect how much tax you pay on your salary. If you’re currently accessing your pension savings, it will also impact the amount of tax you pay when taking money out of your pension.
Keep in mind that income tax rates are currently different in Scotland. The income tax rates in Wales currently match those in England and Northern Ireland, but this could change in the future. This could have some impact on any tax benefits you get on your pension payments. The Scottish government is likely to respond to these changes over the next week.
Tax-free personal allowance
There were no new changes announced for the standard UK-wide tax-free personal allowance, which remains at £12,570 for the 2022-23 tax year which started on 6 April. In the Budget of March last year, the Chancellor announced that it will be frozen at this level until 2025-2026. Most people will only pay tax on anything they earn above this personal allowance threshold.
If you have income of over £100,000, this allowance may be reduced or lost completely.
What are the changes to National Insurance?
You pay National Insurance contributions to qualify for certain benefits and the State Pension.
In April 2022, the rates of NI contributions were increased by 1.25%. This was introduced as a way to increase spending on health and social care and was due to be replaced in April 2023 by a new Health and Social Care Levy.
The Chancellor has announced this 1.25% increase will be reversed from 6 November 2022. The Health and Social Care Levy will also be cancelled.
Jenny Holt, Managing Director for Customer Savings and Investments at Standard Life, said: “Alongside cuts to National Insurance, these changes will mean people keep more of their earnings as the Chancellor looks to encourage growth. The benefits will be felt far more by higher earners than those on lower incomes where the increases will be modest.”
What do the changes in stamp duty mean?
The Chancellor announced several changes to stamp duty that will affect some buyers in England and Northern Ireland. These changes are permanent and come into effect as of 23 September 2022.
The amount at which you pay stamp duty has doubled from £125,000 to £250,000. This means that you won’t need to pay stamp duty on properties that are worth less than £250,000.
The stamp duty threshold for first-time buyers has increased from £300,000 to £425,000. And the maximum value of a property on which first-time buyers' relief can be claimed has also increased from £500,000 to £625,000.
These changes only apply in England and Northern Ireland. Property is taxed differently in Scotland and Wales, and an update from the Scottish and Welsh governments is expected soon.
What does the energy price cap mean for your bills?
These new changes are in addition to the energy bill support measures announced earlier this month by Liz Truss; including an energy bill price cap, and a one-off fuel bill discount.
The cap means that a typical household will pay no more than £2,500 in energy bills for the next two years, from 1 October 2022. Before this, typical household energy bills were due to rise to £3,549 a year from 1 October 2022, and then again in January 2023.
The Chancellor has reconfirmed this news, and confirmed that the one-off £400 fuel bill discount payment for households will also go ahead.
What are the changes to Universal Credit?
The rules are tightening for those receiving Universal Credit. In a nutshell, people currently on Universal Credit will be asked to take steps to look for more, or better paid work. If they don’t, they could have their benefits reduced. The government will provide more time with work coaches to help people achieve this.
Not sure if you’re entitled to Universal Credit or other benefits? Find out how to check if you can claim any benefits in our recent article.
How do the announcements affect my personal or workplace pension?
There were no major changes announced when it comes to pensions, so savers can plan with confidence when it comes to their pension benefits and allowances. Here’s a recap of everything you need to know about from recent announcements.
What is the pension annual allowance for 2022-23?
Your pension annual allowance remains the same for 2022-23. This is the total amount that you, your employer and any third party can normally pay into your pension plans in a tax year, without paying a tax charge. The limit remains at £40,000 or 100% of your earnings in a tax year, whichever is lower, although it could be less if you’re a higher or non-earner, or if you’ve already started taking money from your pension savings. You can find out more about the pension annual allowance in our guide.
Lifetime allowance frozen until 2026
Lifetime allowance will remain at its current level of £1,073,100 until April 2026. This is the total amount of pension benefits that you can build up during your lifetime across all pension schemes before an additional tax charge applies. You can read more in our pension lifetime allowance guide.
The State Pension rose
The State Pension rose by 3.1% in April 2022, as confirmed in the Autumn 2021 Budget. This will affect you whether you’re eligible for the new flat-rate State Pension, which was introduced in April 2016, or the older basic State Pension.
From April 2022, those qualifying for a full new State Pension started to receive £185.15 a week (up from £179.60). And those who reached State Pension age before April 2016, who are on the older basic State Pension, will now receive £141.85 – up from £137.60. You can check your own State Pension forecast on the Government’s website. For more about the State Pension read our article Changes to State Pension - here is what you need to know.
Were there any changes to the triple lock?
The triple lock is used to decide how much the State Pension rises. Normally, the State Pension would rise in line with whichever is the highest of these three measures:
A flat 2.5%
Average wage growth
The rate of inflation
The triple lock was suspended for the 2022-23 tax year because average wages were rising by over 8%. So sticking with the triple lock would mean the State Pension would have to rise by this amount too. By suspending it, the government aimed to ensure fairness for pensioners and taxpayers.
It’s suspected that the government will reinstate the triple lock at some point. This would be welcome news for those receiving the State Pension, but the Chancellor didn’t confirm this.
How much are ISA allowances for 2022-23?
The ISA (Individual Savings Account) allowance in 2022-23 will remain at £20,000. That means you can save up to £20,000 in a Cash or Stocks & Shares ISA, or a combination of both. The Junior ISA (JISA) allowance stays at the current level too, which is £9,000.
Pensions and Stocks & Shares ISAs are investments. They can go down as well as up in value and may be worth less than what was paid in.
Anyone got any good links to what the IR35 repeal means?
I've been working via an umbrella company for a few years, but does this mean I can go back to the wild-west days of having a limited company and paying myself via dividends again?
M
IR35 – off-payroll workingQuote:
Originally Posted by snowman
Mr Kwarteng confirmed that the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6 April 2023.
From this date, this means that workers providing their services via an intermediary will be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance contributions, not the engagers. However the Chancellor said the Government would still “keep compliance under review”.
The simple answer is yes.Quote:
Originally Posted by snowman
Just beware of the fact that anyone paying themselves through dividends was excluded from furlough support during lockdown (ask me now I know). It could happen again.Quote:
Originally Posted by snowman
Those working PAYE contracting were also excluded.Quote:
Originally Posted by learningtofly
I remember Sunak being interviewed about the exclusions and saying there were increased benefits for those who lost their business. Cnut.Quote:
Originally Posted by Stuno1
WTF - does this mean the triple lock reintroduction is not confirmed? Pensioners will be going on strike next.Quote:
It’s suspected that the government will reinstate the triple lock at some point. This would be welcome news for those receiving the State Pension, but the Chancellor didn’t confirm this.
https://questions-statements.parliam...22-06-15/18980
Think that’s about the size of it!Quote:
Originally Posted by snowman
A lot of commentators criticise the removal of the 45% tax rate but not seen similar about this which is basically a tax cut for anyone operating via a company.
You should definitely be suing your accountant for not making sure you fully understood the difference between dividends paid to shareholders and salary paid to a director/employee. Obviously furlough came out of the blue but the point still stands that your adviser should have explained the differences which are not immediately obvious with a “one man band” company.Quote:
Originally Posted by learningtofly
Furlough could never be paid to make up for dividends - that should have been obvious to everyone who has operated a Ltd Co for any length of time. I don't see that any accountant or advisor would neccessarily have explained that - especially as the furlough scheme was never dreamed of prior to it occurring.Quote:
Originally Posted by David_D
Furlough was capped and never intended to fully replace an income.Quote:
Originally Posted by blackal
I obviously acknowledged that furlough was unforeseen but it’s crucial that decisions like salary v dividends are not presented as purely a tax matter.
I realise that, but - for a huge part of the population, it just about covered their normal wages.Quote:
Originally Posted by David_D
I'm not complaining about the amount I received - in order to qualify for the full amount - I would have had to take a much larger amount out of my business each year, and that was not my plan.
But - I do think that people who are directors of a company have a duty to understand all it implies. Many don't, never seek advice and then get caught out.
https://i.postimg.cc/TwgrJ741/94bdb.jpgQuote:
Originally Posted by ryanb741
If the £ falls any lower I can see an emergency 1.00 per cent interest rate rise to shore it up. That’s gonna hurt 😢
Market betting 1.75% hike by November, and interest rates 6% by next summer. Things are changing by the hour.
That will push mortgage rates up to 8%.
There a degree of belief in the Guardian and external quoted expert commentators.
https://www.theguardian.com/business...-business-live
I never got a penny from furlough via an umbrella company as I could continue working remotely.Quote:
Originally Posted by learningtofly
Work was down about 80%, so I was basically screwed from both ends.
Sounds like I need to look into this!
M
That’s the issue, many forced to work inside ir35 with all the permie tax and non of the permie benefits.Quote:
Originally Posted by snowman
I presume any contractors understand that it is the 2017+2021 reforms to the IR35 process that are being repealed NOT IR35 itself.Quote:
Originally Posted by ryanb741
This means that from 6 April 2023 the regime that existed prior to 2017 will apply again to all relevant engagements, with the responsibility shifting back to the individual/PSC and not the End-User to determine employment status and to deal with the resulting tax consequences.
I don't doubt HMRC will target potential abuses so anyone who doesn't want that risk hanging over them needs to get it right.