In the Autumn Statement today, George Osborne talked about a return to prosperity and cited statistics which show a growth in the economy, increased employment and a reduction in borrowing. He announced that tax receipts were down but so was Public Spending.
After a very positive start Osborne talked brought up the omnipresent subject of tax avoidance, announcing the introduction of a new 25% tax on multinationals, from their UK activity, where the money would otherwise be moved out of the UK. The banks took a hammering once again with profits that can be offset by losses carried forward limited to 50% and relief on bad debts delayed which will result in banks paying almost £4 billion more in tax over the next 5 years.
There were no announcements made during the Chancellor’s speech which will have a direct impact on contractors but, as expected, he did announce a consultation on unscrupulous umbrella companies who are not affording their employees Employment Rights and are operating salary sacrifice schemes which are reducing HMRC’s tax take. This follows pressure from the Unions Unite and UCATT who have been campaigning against umbrella companies following the introduction, by HMRC, of the Onshore Intermediaries Legislation which addresses the issue of false self-employment. Despite being heavily involved in the consultation process, Unions called their members to protest when construction companies moved the responsibility of employment from their workers (who previously operated as sole traders) to umbrella companies rather than taking it on themselves.
The Autumn Statement document which was published shortly after the Chancellor’s speech states that, following recommendations from the OTS the Government will stop tax relief from being claimed on reimbursed expenses when they are paid in conjunction with salary sacrifice as in the Pay Day by Pay Day umbrella model. As has previously been announced it will also be looking at travel expenses.
Lisa Keeble, Managing Director of Contractor Umbrella and co-founder of AUCAE commented; “These announcements come as no surprise and representative members from AUCAE are scheduled to take part in the consultations mentioned, the first being on Employment Status at the Treasury on Monday 8th December, following an invitation from the OTS. It will be a case of ‘watch this space’ to see what develops from the consultation but the hope is that the result will reflect the desires of the industry and, finally, create a level playing field.
Lisa Keeble is the Managing Director for Contractor Umbrella Ltd, one of the UK’s Most Respected Umbrella Companies and founder member of AllUmbrellaCompaniesAreEqual.
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