The Autumn Statement – Key Announcements for Contractors
The Autumn Statement was released on Wednesday and the highly speculated ban on contracting did not appear in the report.
The Treasury did, however, say “The government continues to be interested in the IR35 area, but doesn’t have any announcement to make on it at this time.”
The main announcements that affect contractors are listed below but you can access the full report here: http://tinyurl.com/qzqfk9j
Employment intermediaries and tax relief for travel and subsistence in the Autumn Statement
As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company.
Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies. This change will take effect from 6 April 2016
Office of Tax Simplification (OTS) review of employment status
The government has responded to the final report of the OTS review of employment status and is taking forward the majority of recommendations.
Published in March this year, the OTS review put forward more than 20 recommendations included having a “set de minimise level for payments to an individual who carries out some activities for a business, which would definitely not be an employment.”
The accountant explained that, generally, the OTS recommendations “would result in greater certainty and availability of information to contractors so they can determine what their status should be when working for businesses.”
The details of the accepted OTS recommendations are expected to emerge in 2016.
Capital Gains Tax – Entrepreneurs’ Relief: contrived structures
The government will consider bringing forward legislation to amend the changes made by Finance Act 2015 to Entrepreneurs’ Relief, in order to support businesses by ensuring that the relief is available on certain genuine commercial transactions.
Salary Sacrifice
The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach
RTI relaxation to be removed
The ‘on or before’ requirement for RTI filing for payroll will be extended to all employers from April 2016 and there will no further relaxation for micro-employers such as PSCs.
Chartered accountancy firm Moore Stephens warned: “All employers will therefore need to file FPS returns no later than the date salaries are paid in order to avoid penalties.”
Company distributions
The government will publish a consultation on the rules concerning company distributions later in the year.
Other anti-avoidance measures
‘GAAR’
The government will introduce a new penalty of 60% of tax due to be charged in all cases successfully tackled by the GAAR.
The government will also make small changes to the way the GAAR works to improve its ability to tackle marketed avoidance schemes.
‘Disguised Remuneration’
The government intends to take action against those who have used or continue to use disguised remuneration schemes and who have not yet paid their fair share of tax.
The government will also consider legislating in a future Finance Bill to close down any further new schemes intended to avoid tax on earned income, where necessary, with effect from 25 November 2015.
‘Serial avoiders’
The government will introduce tough new measures for those who persistently enter into tax avoidance schemes that are defeated by HMRC.
The government is also widening the Promoters of Tax Avoidance Schemes (POTAS) regime.
‘Extra investment to hit evaders’
£800 million confirmed funding for additional work [by HMRC] to tackle evasion and non-compliance in the tax system.
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