A move closer to IR35 in the private sector – and other Budget news
After weeks of “will they, won’t they” speculation in the run up to to last week’s Autumn Budget, it looks like an extension of the IR35 rules is on the cards at some point - even if it was somewhat hidden in the deck.
While Chancellor Philip Hammond made no mention of it in his speech, the small print told a somewhat different story.
Reforms to “off-payroll working” in the public sector were introduced in April 2017, and it is the view of HMRC that these are working successfully, with IR35 compliance on the rise as a result.
The government have said they will consult on extending these rules to the private sector, with the findings of the consultation being expected some time in 2018.
If and when reforms to IR35 are rolled out to the private sector, we anticipate that they will have a much less disruptive impact that they had on the public sector in April.
We are already supporting numerous agencies to meet the challenges of IR35, with our FCSA-accredited umbrella solution, fee payer services, outsourced IR35 consultations and model-restructuring advice. Talk to us about help with IR35
For now, it’s a case of “keep calm and carry on” and watch this space for further information and guidance - we will have lots to come.
We’ve put together a comprehensive overview of the key Budget announcements. As usual, some of these measures come in straight away, some take effect next year and some not until 2019 or 2020.
With immediate effect
· Stamp Duty Land Tax (SDLT) abolished for first time buyers on homes costing up to £300,000; no SDLT on first £300,000 of first time buyer’s purchase of homes up to £500,000.
· Marriage Allowance can be claimed to transfer the benefit of 10% of the personal allowance after the transferring spouse has died.
· For tax year 2017/18, unincorporated property business landlords will have the option to use simpler fixed rate deductions for miles travelled by car, motorcycle or goods vehicle for business journeys.
From January 2018
· Indexation allowance, which gives companies relief for the effect of inflation on capital gains, will be frozen.
· With effect from 1 January 2018, the rate of the Research and Development Expenditure Credit increases from 11% to 12%
From April 2018
· Tax-free personal allowance rises from £11,500 to £11,850; threshold for 40% tax rises from £45,000 to £46,350. Rates and bands for Scottish taxpayers are still to be confirmed by the Scottish Parliament.
· Freezing of VAT registration threshold at £85,000 for two years instead of normal £2,000 increase, but speculation about possible reduction in threshold was unfounded.
· Abolition of Class 2 National Insurance and reform of Class 4 NIC for self-employed deferred by a year to April 2019 in order to assess impact on contributory benefits.
· ‘Making Tax Digital’ reforms for income tax reporting will not now be introduced until 2020 at the earliest; VAT-registered traders to operate ‘Making Tax Digital for VAT’ from April 2019.
· Class 4 National Insurance Contributions increases proposed in March 2017 will not take effect.
· Dividend Allowance, introduced at £5,000 for tax year 2016/17, reduced to £2,000 for 2018/19.
· Employees will not be charged income tax on benefit of charging an electric car at work.
· Supplement of 3% in calculating taxable employee benefit of a diesel company car will increase to 4%.
· Employees with SAYE-related share option schemes will be able to take a 12-month break from saving, up from the current 6 months, while on maternity or paternity leave.
· ISA investment limit for 2018/19 unchanged at £20,000; Junior ISA limit rises in line with inflation to £4,260.
· Lifetime Allowance for tax-advantaged pension funds rises from £1m to £1,030,000.
· Increase in Enterprise Investment Scheme investment limit from £1m to £2m, provided any amount over £1m is invested in one or more knowledge-intensive companies.
· Capital Gains Tax annual exempt amount rises from £11,300 to £11,700.
· Annual Tax on Enveloped Dwellings to rise by 3% in line with inflation.
· From April 2019, employers paying subsistence expenses will no longer have to check receipts if they are within benchmark subsistence scales.
· Capital Gains Tax charge for non-resident taxpayers extended to cover non-residential as well as residential property in the UK with effect from 1 April 2019 (companies) and 6 April 2019 (individuals).
· Government will legislate to give local authorities the power to charge a 100% council tax premium on empty properties.
· Allocation of £155m in extra resources to HMRC to fund action on the hidden economy, marketed tax avoidance schemes, enablers of tax fraud, non-compliance and collection of debts 9 months overdue.