Summer Budget 2015 - overview for contractors
Contractors, freelancing, micro business and self-employment
► Raise tax rates on dividends from April ‘16 – £5k tax-free, then 7.5%; 32.5%; 38.1%
► Remove the NIC Employers’ Allowance for directors who are their firm’s sole employee
► Launch a consultation into IR35’s effectiveness and consult with employers
► Block tax relief on T&S expenses for ‘SDC’ contractors from April ‘16
► Cut corporation tax to 19% in 2017 and 18% in 2020
► Put the OTS on a permanent footing and commission it to review taxation of small companies
► Ask OTS to review the closer alignment of income tax and NI
► Consult in 2015 on abolishing Class 2 NI and reforming Class4 NI
► Introduce statutory exemption for trivial benefits in kind from April ‘16
► Freeze fuel duty & cap the hike in regulated rail fares to RPI for this parliament’s term
► Actively monitor the growth of salary sacrifice schemes that reduce employment taxes
Tax and Avoidance
► Give HMRC £800m to raise £7.2bn by combating fraud, avoidance and the hidden economy
► HMRC to respond to consultation on ‘closure notices’
► Introduce legislation to enable HMRC’s direct recovery of debts power
► Publish a consultation into serial avoiders who keep entering failed avoidance scheme
► ‘Name & Shame’ serial avoiders
► Abolish ‘non-dom’ tax status for individuals in the UK for 15 of the last 20 years
► Raise personal allowance to £11,000 from April ‘16
► Raise higher rate threshold to £43,000 from April ‘16
► Give HMRC the power to acquire data from online intermediaries to combat hidden economy
► Remove the ability for companies to use UK losses and reliefs against a CFC charge
► HMRC to publish a roadmap in 2015 showing how tax admin for small firms will change
► Legislate to refund to eligible public bodies the VAT incurred on specified shared services
► From today, restrict the corporation tax relief a company obtains for the cost of ‘goodwill’
SMEs, Employers, Commerce & the Sectors
► Make permanent the AIA at a level of £200,000 from January ‘16
► Hike NI Employment Allowance to £3k (but ban it for directors who are the sole employee)
► Introduce a new Apprenticeship Levy on all large firms from April 2017
► Phase out bank levy but introduce 8% corporation tax surcharge on bank profits
► Introduce final legislation implementing two major reforms to the SME lending market
► Consult on Sunday trading laws
► Expand the North Sea investment and cluster area allowances
► Invite bids for a new round of Enterprise Zones in England
► Introduce a National Living Wage
► Restrict public sector pay awards to 1% over next 4 years
► Allocate up to £10m to the broadband programme from April ’16 to connect South West Eng
► Invest £23m in Next Generation Digital Economy Centres over 6 sites in 6 cities
► Establish a network of National Colleges to provide high quality professional and technical routes into employment.
Misc
► Remove all £1million family homes from IHT
► Introduce new vehicle excise duty rates
► Freeze working age benefits for 4 years
► Reduce tax credits threshold
► No future tax/universal credit for families with more than two children
► Extend free childcare entitlement to 30 hrs a week for parents of 3&4-year-olds
► Defer MOT tests until cars are 4 years old
► Increase the level of Rent-a-Room relief from £4,250 to £7,500 from April ‘16
► Impose ‘earn or learn’ obligation on universal credit recipients aged 18-21
► Retain the current duty exemption for small cider producers
Editor's Note: Further Reading on Summer Budget 2015 -
Summer Budget 2015 hits PSC contractors, hard
Osborne in four-fold attack on contractors