Contractor loans could be subject to retrospective tax
Contractors could be hit with retrospective tax charges for historic disguised remuneration loans if a new Government proposal takes effect. In a technical note on disguised remuneration, the Government outlines plans to impose income tax and National Insurance Contributions (NICs) on loans that are outstanding on 5 April 2019. This will apply to employee benefit trust (EBT) loans and contractor loans, including those made before tax rules to stop disguised remuneration were introduced on 9 December 2010 and 6 April 2011. HMRC has offered contractors the opportunity to settle, however those who decide not to may be issued with an accelerated payment notice (APN). More...
Challenges to contractor IR35 reforms unlikely to be sustainable
Any legal challenge made against proposed IR35 reforms impacting contractors in the public sector is unlikely to be sustainable, a tax lawyer has warned. The Association of Professional Staffing Companies (APSCo) recently announced it was lobbying against the Government proposals. However, David Smith of law firm Evershed highlights April 2014 tax agency rules that require agencies to operate PAYE for workers unless they can demonstrate they aren’t subject to supervision, direction or control (SDC): “The same could be said that recruitment firms do not necessarily have a close operational relationship with the worker, in order to assess the existence of SDC, and those rules are not confined to public sector engagements.” More...
IT contractors to benefit from London’s FinTech emergence
IT and finance contractors in the capital can expect sustainable rising demand from the finance sector. This is according to a recent survey by recruitment specialist Robert Half, which indicates that 92% of UK-based financial services leaders predict London can become the world leader in financial technology (FinTech). New York is ranked as London’s most likely competitor, identified by 35% of executives. “Increasingly companies operating in this industry [FinTech] are finding themselves competing for talent with established players in both the banking and IT sectors,” notes Robert Half Financial Services UK vice-president Luke Davis. More...
Contractor prospects could benefit as cross-sector momentum slows
Contractors could take advantage of slowing momentum, as indicated by the latest Purchasing Managers’ Indexes (PMIs) from Markit and the Chartered Institute of Purchasing and Supply (CIPS). Factors including economic uncertainty and the upcoming EU referendum may be causing slowing cross-sector growth. As a result, firms are taking a more cautious approach to hiring, suggesting that clients may favour low-risk contingent hires over permanent staff. This month’s PMIs highlight:
- The UK manufacturing sector remained in growth territory during March, although subdued, with output largely unchanged from February’s seven-month low. As a result, the UK Manufacturing PMI reports further mild cuts made to the permanent workforce, suggesting opportunities may arise for contractors to plug gaps if production accelerates.
- Construction contractors fared better in March. Staffing levels continued to rise, although they did so at the slowest rate seen since June 2013. The UK Construction PMI attributes this to caution amongst firms as a result of a weak rise in new work received. However, 51% of respondents expect a rise in business activity, while only 11% forecast a reduction, signalling that contractor demand is set to pick up.
- Contractor demand and total activity in the services sector continued to rise, but at a moderate pace largely unchanged from February. Whilst staffing levels increased for the 39th consecutive month, the UK Services PMI points towards global economic uncertainty and the upcoming EU referendum as factors resulting in “less appetite for a more robust response in activity”.
Contractors contribute to HMRC unpaid capital gain tax yield
Contractors have contributed to the extra £154m in unpaid capital gains tax (CGT) collected by HMRC as a result of a clampdown last year, Economia reports. HMRC data shows that local compliance teams collected £115m of extra CGT, with an additional £39m being claimed as a result of its counter avoidance directorate which targets marketed tax avoidance schemes. Law firm Collyer Bristow believes the uncovered schemes reduced an individual or company’s CGT bill by creating artificial capital losses, or by using offshore trusts and structures. More...
Contracting stakeholders criticise HMRC following digital tax roll-out
Contracting stakeholders have spoken out against HMRC’s plans for quarterly tax filing, days after digital tax accounts were rolled out for individuals and small business owners. Accountancy Age reports the Administrative Burdens Advisory Board’s (ABAB) warning of the burden that mandatory quarterly tax updates would place on contractors and small businesses. Meanwhile, the Federation of Small Businesses (FSB) claims costs to those affected will skyrocket. “Forcing small firms to pay for expensive digital accounting software is not going to help anyone,” notes FSB national chairman Mike Cherry. “It will simply add to the cost of doing business in the UK.” More...
Oil and gas contractor recruiter shortage could slow hiring when sector recovers
Contractor recruitment in the oil and gas sector could stall as a result of a talent shortage once the sector picks up, Recruiter reports. This is the warning from an oil and gas recruiter which was forced to reduce its workforce by 75% due to the industry downturn. “We have some consultants leaving the industry completely, which is a shame,” comments Vitruvian Consultants managing director Joe Rothwell. “When the market picks up and volume increases again, those companies will have a skills gap.” More...
Contractor dividend tax hikes come into effect
Dividend tax hikes impacting limited company contractors came into effect on 6 April 2016. Contractors within the basic rate tax band will now pay 7.5% on any dividend income. Those within the higher rate band will pay dividend tax at a rate of 32.5%, and contractors in the additional rate band will now pay 38.1%. Contractors will also receive a tax-free Dividend Allowance on the first £5,000 of dividend income per year. More...
IPSE Freelancer of the Year Awards 2016
Contractors have little time left to submit entries for this years’ Freelancer of the Year Awards, held by the Association of Independent Professionals and the self Employed (IPSE). IPSE is looking for outstanding applicants for its Aspire Award (for those aged 18-23) and Inspire Award (those aged 23 and above). The winners will be announced on 9 June 2016 at IPSE’s annual National Freelancers Day ceremony at the Hospital Club in Covent Garden, during a celebration of the UK’s most exciting and enterprising contractors and self-employed. More...