The good news for contractors from the 2016 Budget
This week, the country’s finances have been in the headlines in anticipation of the Chancellor’s Budget announcement, with a lot of speculation as to what the future will hold for all the country’s residents, from taxpayers to those who rely on the state for all their income.
Contractors are amongst those who were expecting the Budget to affect them significantly, and with the planned clampdown on Personal Service Company contractors appearing to be inevitable, many people were searching for some kind of good news.
There is enough positive news to keep contractors feeling optimistic, not least because of the chancellor’s turnaround on the matter of pensions. Despite fears that attempts to simplify the pensions system could result in savers losing out, the chancellor has apparently had a change of heart resulting in no change to the pension limits that some people had feared would be imposed. George Osborne’s colleague Steve Webb had been suggesting that a complete overhaul of the pension system would result in a windfall for the Treasury, but these plans appear to have been shelved in the wake of substantial opposition from those who would be affected.
Those who want to save have also been pleasantly surprised to learn that a relatively simple savings vehicle is to be introduced – the Lifetime ISA. These will be available from April 2017 and be open to savers under the age of 40 who will be able to save up to £4,000 per year which will attract a government contribution of £1 for every £4 deposited, effectively ‘grossing up’ savings made by those who pay the basic rate of tax. This could be of interest to contractors particularly, as it could be a considered a flexible alternative or addition to traditional pensions.
Full details of the LISA scheme are yet to be confirmed following a consultation, but one of the most appealing aspects of it as it has been presented is the opportunity to make penalty-free withdrawals at the point of retirement or to purchase a home.
Whilst the Budget predictions contained plenty of doom and gloom, the reality of the announcement has had some positive elements that go some way to offset the negative elements.
For contractors who want to understand more about the best way to organise their finances, our contractor calculator is a god place to start. We also have handy guides to help you understand the advantages and disadvantages of limited companies and a FREE 60 page guide to contracting which are invaluable resources.
For more information on how the recent Budget announcement will affect you, our experts are on hand to offer their advice and support so call us today on 01442 275789 or email email@example.com.