Contractor demand to see growth over the next quarter: REC JobsOutlook
Contractor demand is likely to grow during the next quarter, as 37% of contractor clients plan to increase agency worker headcounts. The latest Recruitment and Employment Confederation (REC) JobsOutlook also shows demand will be sustained over the longer term, with 34% of clients predicting their use of contractors will increase in the next four to 12 months. “Businesses are more optimistic about the future than they were 12 months ago,” notes REC director of policy Tom Hadley. “Our latest data shows businesses have no intentions of reducing their use of agency staff for the foreseeable future.”
Contractor tax advisers “doubt impact of new GAAR legislation”
Contractor tax advisers claim that the new General Anti-Abuse Rule (GAAR) designed to combat abusive tax avoidance “may be hard to apply”. Writing on AccountingWeb, Nick Huber says “experts reckon that the GAAR’s main purpose will be as a deterrent”. Burges Salmon partner John Barnett told Huber: “I think [HMRC] sees it as a nuclear option: something which works much better as a deterrent rather than through actual use”. GAAR came into force in July 2013, but its provisions took effect from 4 April 2013. More...
HMRC fails to secure tax from contractors using employee benefit trusts (EBTs)
HMRC has failed to collect an estimated £2bn in unpaid tax held by employee benefit trusts used to make payments to contractors and high earning employees. AccountancyAge’s Calum Fuller writes that “less than a quarter of the amount believed to be owed has been collected by HMRC”. The benefit of EBTs was removed when ‘disguised remuneration’ laws were introduced in December 2010. HMRC launched a campaign in 2011 encouraging scheme providers, employers and employees to come forward and pay any outstanding tax. More...
IT contractors to benefit from $7.2bn of new contracts signed from January to May
IT contractors can expect new work to arise from £7.2bn worth of contracts signed in the first five months of 2013. These included three ‘megadeals’ worth over $1bn each. IT industry analyst Ovum predicts that the values of deals in 2013 “should surpass the level announced in 2012 ($12.8bn) with relative ease”. This is a welcome shot in the arm for the UK’s previously anaemic IT sector. Ovum is also predicting that the public sector will continue to be a major consumer of outsourced IT services.
Energy contractors may see accelerated shale gas development from new tax breaks
Oil, gas and energy contractors may start to benefit from accelerated shale gas development if generous tax breaks proposed by the government are introduced. The Treasury has published a consultation on its proposed tax regime for shale gas, which proposes taxing production at 30%, less than half of the existing tax of 62%. Local communities close to drilling sites would also benefit from cash lump sums and a percentage of the production income. More...
Boost for contractors with manufacturing clients as output increases
Contractors with clients in the manufacturing industry should benefit from renewals and new contracts as output in the sector increases. The Confederation of British Industry’s (CBI) quarterly Industrial Trends Survey shows that new orders and production both rose in the three months to July. “Optimism in the sector has risen again, and demand conditions are expected to improve further in the coming three months,” explains CBI director of economics Stephen Gifford. “The gentle rise in confidence is being reflected in firms’ headcount, which is rising at the fastest rate in a year.” More...
Contractors with overseas clients help to boost services exports
Contractors with overseas clients have helped to boost the UK’s services exports, with over half of those firms doing business abroad reporting an increase in sales. The DHL/British Chambers of Commerce (BCC) Trade Confidence Index shows manufacturing firms have increased exports, with 44% of exporters reporting an increase. BCC director general John Longworth is delighted with the results: “For the first time on record, these results are positive across the board. Export sales and orders have gone up, confidence is high and expectations around profitability have increased.” More...
Contractors trading via limited companies may gain a further RTI extension
Contractors trading via their own limited companies may gain further time before being required to adopt HMRC’s Pay As You Earn (PAYE) Real Time Initiative (RTI). HMRC has issued a consultation suggesting that the current deadline to comply for companies with fewer than 49 employees be extended from 1 October 2013 to 5 April 2014. If the measures are adopted, companies with up to 49 employees, including contractor limited companies, can continue to report monthly, instead of on or before actual payment dates, which is what RTI requires.
Contractors have until 31 July 2013 to renew their tax credit claims, or risk losing them
Contractors have until the end of the month to renew their tax credits claims with HMRC, or they risk losing them altogether. Most contractors earn above the thresholds so don’t benefit from tax credits. However, contractors suffering a sudden loss of income with few savings, or who have been ‘on the bench’ for an extended period, may find tax credits make a valuable contribution to their reduced incomes.
Umbrella company contractors “embracing pensions auto-enrolment”, reports Parasol
Umbrella company contractors at employment services provider Parasol are choosing to remain inside the company scheme and not opt out. Of more than 3,500 contractor employees automatically enrolled by Parasol under the new legislation, only 524 have opted out. Derek Kelly, managing director at Parasol, described the lower-than-expected opt-out rate as a surprise: “We had originally anticipated an opt-out rate of around 50%, but like many major employers have been taken aback by the initial results.” More...