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Posts tagged “IR35”

The Chancellor Philip Hammond delivered his Autumn Budget speech, a little earlier than in previous years, on 29 October 2018, at 3.30pm. The key points for freelancers, contractors and small business are set out below. 
I wrote recently about Tax Avoidance Schemes to remind you of the basics. Now to appraise you of the developments this year, including the new legislation giving HMRC more power to tackle this tax avoidance. 
HMRC is always keen to tackle tax avoidance and for the past 1-2 years it has focused its attention on “tax avoidance schemes”. Contractors are the most common target for such schemes whilst claims of 90-95% take-home pay may sound appealing, they are a honey-trap that you need to avoid! 
Thinking of becoming a contractor or setting up a small business? You’re not alone. According to the Office of National Statistics (ONS) self-employment has risen steadily since 2000. In fact, it’s widely believed that self-employed workers are the backbone of the British economy. If you’re abandoning a steady job in search of the freedom and success that contracting can offer, you need to know the key implications. 
The Chancellor detailed his Spring Statement today, 13 March 2018. The aim of the statement is no longer to announce tax and spending changes (that now occurs just once per year in the Autumn Budget) but simply to give an update of the overall health of the economy, an update on progress made since the Autumn Budget and an invitation to people to give views on any changes the government are considering. 
 
So, while no one was expecting any tax changes, the one pressing concern on all contractor’s minds (and mine!) was if there would be further word on the IR35 Private Sector Consultation mentioned in the Autumn Budget
As a contractor/freelancer operating as a limited company, you could be at risk of being investigated by the HMRC to see if you fall under IR35. 
In the Autumn Statement 2016 Philip Hammond announced some proposed changes in relation to how public sector contractors work within IR35. These changes have been confirmed in the Spring Budget 2017 and will come into effect from April 2017. 
In our recent article explaining the recent changes to contractors’ claims for tax relief on travel and subsistence, we briefly covered what is meant by “supervision, direction, and control” as a test to distinguish ‘false self-employment’. There hasn’t been a great deal of guidance provided by HMRC, but using the Employment Status Manual, we hope to provide a little clarity on what the new rules mean for UK contractors. 
Contractors in the UK may have heard recent rumblings of new legislation placing restrictions on claiming tax relief on travel and subsistence. The dreaded “IR35” will take effect from this month (April 2016), but what do the changes mean for you? 
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