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After what felt like a long and hard-fought campaign and a significant amount of media input, the election result was something of a surprise. Despite the apparent closeness of the campaigns as polling date drew closer, the Conservatives ended up with a significant enough majority to allow them to form a government. Without the Liberal Democrats pushing their policies and tempering Tory policies, it looks as though there is likely to be a raft of changes implemented over the next five years, some of which could have an impact on the increasingly large contracting workforce.
One of the major pledges that the Conservatives have made was actually in line with some of the other parties’ promises and that was to raise the level of personal allowance to £12,500. This means that lower earners can expect to lay less tax, but contractors may not benefit as much as they might like given that the threshold for National Insurance Contributions seems unlikely to change at the same pace.
For those who have been in despair at the complexity and numerous vagaries of the current tax system, the Tory pledge to make the Office for Tax Simplification a permanent entity will be a welcome one. Their plans to allow married couples to transfer £1,600 of their tax free allowances between themselves will also be welcomed by those who could take advantage of such a proposal. However, there will be concern amongst contractors earning more than £150,000 who will be affected by plans to cut tax relief on their pension contributions.
There are also potential downsides to contractors of the party’s stance on tax avoidance as their stated goal to crack down on ‘aggressive tax avoidance’ could further muddy the waters when it comes to establishing whether or not people are legitimately self employed or not. Given the issues which have been caused by continuing uncertainty over the scope of IR35, further moves which could make it difficult to prove your employment status might not be popular with those who have been caught in the red tape associated with such investigations.
However, positives may come in the form of a planned reduction in red tape to the tune of £10 billion, and Tory plans to increase the level of government spending which is filtered through small businesses. Their pledge to establish the Small Business Conciliation Service to deal with issues including late payment could make things easier for those who are working for themselves.
If you want to ensure that you are still maximising your income and taking advantage of potential savings even in the current climate of potential change, then our guide to limited companies could help you to make significant savings as well as planning for your future.
If you really want to ensure that you are up to date with all the latest news from the world of contractor finances, then our low-cost packages will provide you with all the expert advice you need to make your business a success. Give us a call for more details.
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