Emergency Budget Impact On Contractors

IR35 Review

As expected IR35 (otherwise known as Intermediaries Legislation) will be reviewed as part of a wider review of small business taxation. Prior the formation of the Coalition Government the Conservatives announced plans to review the legislation in a letter to the Professional Contractors Group (PCG). Details are expected to be released in the near future.

VAT Increase

The rate of Value Added Tax (VAT) will be increased from 17.5% to 20% on the 4th January 2011. For further details of the implications of the increase on the retail sector please see 20% VAT Rate Announced

No mention of Income Shifting or Umbrella Company Expenses

No mention was made of Income Shifting or Umbrella Company Expenses. With the Implementation of the Agency Workers Directive (AWD) due for late 2011 any change may not have mattered that much anyway. Umbrella Companies may face the chop with the introduction of the new AWD legislation.

Personal Tax Allowance Increase

The Basic Personal Tax Allowance will increase to £7,475 from April 2011. The allowance will therefore increase by £1,000.

Higher Rate Tax

Higher Rate Tax Bands will be frozen until 2013 / 2014. This will only impact truly high level earners.

Small Business Corporation Tax

The Small Business Corporation Tax Rate will be reduced down to 20% in 2011

Capital Gains Tax

Capital Gains Tax will increase to 28% for higher rate taxpayers from midnight tonight (22nd June 2011). The tax rate jumps from 18%

CIPD Reaction to Emergency Budget

The Chief Advisor at the Chartered Institute of Personnel & Development, John Philpott, said Osborne’s speech “must surely rank as the most astonishing UK budget statement in modern times,” and that the deficit reduction plan represented an “unprecedented fiscal squeeze”. “Yet both he and the independent Office for Budget Responsibility (OBR) reckon there is a greater than evens chance that the government will meet what the Chancellor calls its ‘fiscal mandate’ with barely any serious short-term impact on economic growth and employment.”

Commonwealth Contractors

Commonwealth Contractors is a collection of highly skilled professionals from the Commonwealth and beyond. We partner with OISC Registered Immigration Partners capable of professionally representing Tier 1 Visa Applications / Extensions AND Tier 2 Licensed Consultancy & Associated Trust Partners who may be prepared, where required, to sponsor a Medical, Information Technology or Engineering Professional on a Tier 2 Visa (formerly UK Work Permit).

To find out more call Commonwealth Contractors now on 0330 390 9021 or Submit your details now and we will get right back to you. Please be prepared to send a copy of a recent CV so that we can pass to interested partners.