Key tax dates and deadlines for 2018/19
It is an inevitable reality that, for anyone earning a livin...
By Lynne Gowers on 2nd November 2017
Chancellor Philip Hammond will deliver the Autumn Budget on the 22nd November 2017. You wouldn’t be wrong if you are thinking “Hang on – didn’t we just have a Budget”?
Indeed, this is the second of the year for Chancellor Hammond, as he announced last time around that from 2018 there will only be one major financial statement held at the end of the year, so this month’s Budget accommodates the timetable switch from Spring to Autumn.
As we are only 6 months on from the last Budget, some commentators are speculating that 22nd November’s announcement won’t have too much by way of radical changes. Having said that, rumours of a “bold” Budget are rife, with the government under pressure to deliver decisive, voter-friendly policies in the wake of the General Election.
Here are 6 points contractors in particular should look out for, both in terms of predictions and the major decisions facing the Chancellor.
A study by the Financial Conduct Authority revealed that almost a third of UK adults currently have no pension provision and will be fully reliant on the state pension when they retire. The report suggested that this is partly due to the increasing numbers of people working outside of traditional employment, such as contractors and the self-employed, for whom pension auto-enrolment does not apply.
The Taylor review, published earlier this year, recommended introducing pension auto-enrolment for the self-employed through self-assessment. This would mean 4% of a contractor’s income being paid into a pension scheme, unless they opt out. The Chancellor may reveal in his Budget speech whether this measure will be adopted.
In the Spring Budget, the Chancellor announced his intention to raise Class 4 National Insurance Contributions (NICS) from 9% to 11% by 2018.
Such was the backlash from backbench MPs, the government was forced to make an embarrassing U-turn and drop the policy.
However, there are indications that it could make a reappearance. Mr Hammond said at the time, “It remains our judgement that the current differences in benefit entitlement no longer justify the scale of difference in the level of total NICs paid in respect of employees and the self-employed.”
So, self-employed NICs are once again in the spotlight – will the reversal be reversed?
In the 2016 Budget, the government pledged to reduce the corporation tax rate from the current rate of 20% to 17% by 2020. It was reduced to 19% from 1st April 2017.
So what do the experts say? James Hender, head of the private wealth group at accountancy heavyweight Saffery Champness, observed that the government needs to strike a balance between “ensuring the UK demonstrates that it is open for global business, and being publicly seen to tackle any perception of big business not paying its way.”
Exactly where the Chancellor will fall on this issue, will become apparent on the 22nd.
Revenue from stamp duty is at an all time high, but critics argue that it is a major deterrent to home movers and is stalling the UK housing market, as it can hold up high-value sales.
There are growing calls for the government to scrap stamp duty for older homeowners which would encourage downsizing and free up housing for younger families.
Perhaps the Chancellor will take the advice of the Association of Accounting Technicians (AAT), who suggest that one way to address the stamp duty problem is to switch liability from buyers to sellers.
Perhaps the biggest fear throughout the contracting community is that this year’s changes to IR35 in the public sector will be rolled out across the private sector.
This would see responsibility for determining IR35 status shift from the limited company contractor to the private sector body that is engaging them, as it now is in the public sector.
However, commentators are becoming increasingly confident that such a measure will not feature in the forthcoming Autumn Budget. Instead, there is hope that the government will give the public sector reforms more time to bed in, and tackle the issues arising from them.
When he entered the job last year, Chancellor Hammond pledged to reduce public borrowing to less than 2% of national income by 2020-21 and eliminate the budget deficit completely by the mid-2020s.
Mr Hammond now faces the dilemma of either abandoning this timetable or ignoring demands for more public spending.
There is also a school of thought that the public and parliament might support a “hypothicated” tax – where a specific tax rise would be ring-fenced to spent directly on social care and the NHS.
Again, a balance needs to be found between the long term needs of the economy and the strain on public services as a result of years of austerity measures.
Philip Hammond will take to his feet at 12.30pm on Wednesday 22nd November, straight after Prime Minister’s questions. He will speak for about an hour, setting out the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility (OBR).
We will be live-tweeting throughout the Chancellor’s Budget speech and we will also have a full review available to download shortly afterwards.
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