Budget nasties in March for Contractors?
Discussion
Chaps,
I have just splashed back into the contracting world, having been a permie for the last 18 months. (A week in and I am loving it, should you be wondering ... )
However, a small grey cloud was forced into my clear blue sky of happiness over the weekend by a fellow contractor friend muttering about Greedy Gordo planning to muller contractors in the forthcoming budget. He had very few details, and couldn't tell me much, but was a bit dismal about it all. (His situation is slightly different as he uses an umbrella company and I don't, and he thought that this may mean that I am less affected than he will be.)
Is this a vile rumour, or has anyone else head of plans for more oh-nasties? (Obviously, it is a budget, so it will be lube-up time for everyone, as usual ... )
(This may have been discussed on here before, in which case apologies.)
Oli.
I have just splashed back into the contracting world, having been a permie for the last 18 months. (A week in and I am loving it, should you be wondering ... )
However, a small grey cloud was forced into my clear blue sky of happiness over the weekend by a fellow contractor friend muttering about Greedy Gordo planning to muller contractors in the forthcoming budget. He had very few details, and couldn't tell me much, but was a bit dismal about it all. (His situation is slightly different as he uses an umbrella company and I don't, and he thought that this may mean that I am less affected than he will be.)
Is this a vile rumour, or has anyone else head of plans for more oh-nasties? (Obviously, it is a budget, so it will be lube-up time for everyone, as usual ... )
(This may have been discussed on here before, in which case apologies.)
Oli.
There are absolutely NO changes to the current IR35 regulations and the Revenue's handling of these ( i.e. personal service companies or other intermediaries).
There are absolutely no changes to the tax rules on detreming employment/self-employment status.
There are absolutley NO changes to the taxation of dividend/salary income in owner managed companies.
The changes will affect those who work through "umbrella" companies. The Revenue are not happy with the rather loose interpreation of "shareholders" in these companies and will be cracking down on perceived abuses.
There are absolutely no changes to the tax rules on detreming employment/self-employment status.
There are absolutley NO changes to the taxation of dividend/salary income in owner managed companies.
The changes will affect those who work through "umbrella" companies. The Revenue are not happy with the rather loose interpreation of "shareholders" in these companies and will be cracking down on perceived abuses.
Eric,
The resident PH Tax Expert strikes once again - many thanks.
That fits with what my friend told me. Particularly that he is more in line for problems than am I. (I have my own company and contract through that, keeping a suitable number of clients, IR35-friendly contracts, use my own kit not the client's kit and whatnot.)
Sounds like I can carry on affording to live, eat and put juice in the car (apart from the fact that all of those are going to be more expensive as well, eh?)
Thanks again.
Oli.
ETA: Eric, out of interest, where do you (and your fellow accountants) get your information from? Your post was very clear and categorical - I'm not doubting you, but wondering what are the systems and processes by which you get hold of this information in advance of the budget? And, if you can get hold of this information, what else will there be in the budget that we can have a sneak preview of? I expect that it will be a fairly benign one, as Brown is PM in waiting and he won't want to be seen as a complete b45st4rd before taking office, but I could be wrong.
The resident PH Tax Expert strikes once again - many thanks.
That fits with what my friend told me. Particularly that he is more in line for problems than am I. (I have my own company and contract through that, keeping a suitable number of clients, IR35-friendly contracts, use my own kit not the client's kit and whatnot.)
Sounds like I can carry on affording to live, eat and put juice in the car (apart from the fact that all of those are going to be more expensive as well, eh?)
Thanks again.
Oli.
ETA: Eric, out of interest, where do you (and your fellow accountants) get your information from? Your post was very clear and categorical - I'm not doubting you, but wondering what are the systems and processes by which you get hold of this information in advance of the budget? And, if you can get hold of this information, what else will there be in the budget that we can have a sneak preview of? I expect that it will be a fairly benign one, as Brown is PM in waiting and he won't want to be seen as a complete b45st4rd before taking office, but I could be wrong.
Edited by zcacogp on Monday 5th March 09:38
Being a member of three professional bodies, I receive a number of accounting and tax related magazines which keep me up to date.
I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
Eric Mc said:
Being a member of three professional bodies, I receive a number of accounting and tax related magazines which keep me up to date.
I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
Fast-route to the inside track. Thanks - I had wondered. I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
Presuably HMRC keep the professional bodies updated with their thoughts as they develop them.
Oli.
Leftie said:
Yesterdays Torygraph was saying that companies house had received loads of company formations from the individuals working under the umbrella copanies, which were in effect thwarting his attempts to fill his coffers by nailing the umbrella companies.
And isn't this entirely to be expected? You close off one part of the loophole, and hey presto! - everyone dashes off to fit through the other part of the loophole! The downside to all this is that next year, Fatso Brown (or his replacement) will nail everyone with small director-owned companies in another attempt to fill his coffers. Which means that the likes of me will be hammered.
Oli.
I am one of those many who decided to avoid the majority of the government sponsored passage investigation activities forthcoming in April and have started a Ltd company.
It's currently a right poke in the eye registering for this, that and the other but I've heard the grass is greener on the other side.
It's currently a right poke in the eye registering for this, that and the other but I've heard the grass is greener on the other side.
Eric Mc said:
Being a member of three professional bodies, I receive a number of accounting and tax related magazines which keep me up to date.
I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
shout99 is a good source too. I also attend regular update lectures during the yeat.
I am a member of the FSB (Federtaion of Small Business) and their magazines contain quite a lot of good technical information too.
Finally, the websites, www.accountingweb.co.uk and www.taxationweb.co.uk are always worth checking at least once a week.
Edited by victormeldrew on Tuesday 6th March 19:03
M Powered said:
I am one of those many who decided to avoid the majority of the government sponsored passage investigation activities forthcoming in April and have started a Ltd company.
It's currently a right poke in the eye registering for this, that and the other but I've heard the grass is greener on the other side.
The grass is always greener on the other side! It's currently a right poke in the eye registering for this, that and the other but I've heard the grass is greener on the other side.
It's a different type of grass, and it suits me (well, as I am re-discovering), but it doesn't suit everyone. All the best with it, and I seriously hope it works out. If you ever want to compare notes with someone who has done it before, do drop me a line ...
Oli.
Thanks for the offer Oli.
Heard about a good one today - buying a Lotus as a company car. I don't understand the full details yet, but essentially its low CO2, so low car tax, and write the depreciation off on the P&L account.
Needs more investigation, but certainly had me dribbling about re-acquainting ones self with my own Exige. Oh dear, I have just drooled everywhere.
Heard about a good one today - buying a Lotus as a company car. I don't understand the full details yet, but essentially its low CO2, so low car tax, and write the depreciation off on the P&L account.
Needs more investigation, but certainly had me dribbling about re-acquainting ones self with my own Exige. Oh dear, I have just drooled everywhere.
Depreciation is not allowed as a tax deductable cost,I'm afraid.
Even though all accountants will provide depreciation in the accounts, the tax man demands that depreciation be reversed when calculating the taxable profits of the business. Instead, a Capital Allowance claim is substituted. The problem with Motor Cars (ANY Motor Cars - not just Lotuses) is that the maximum Capital Allwamce claimable in any one year is £3,000, irrespective of the cost of the vehicle. Therefore, if you bought an Exige for (say) £30,000, Depreciation at 25% would be £7,500 but Capital Allowances would only be £3,000.
Even though all accountants will provide depreciation in the accounts, the tax man demands that depreciation be reversed when calculating the taxable profits of the business. Instead, a Capital Allowance claim is substituted. The problem with Motor Cars (ANY Motor Cars - not just Lotuses) is that the maximum Capital Allwamce claimable in any one year is £3,000, irrespective of the cost of the vehicle. Therefore, if you bought an Exige for (say) £30,000, Depreciation at 25% would be £7,500 but Capital Allowances would only be £3,000.
zcacogp, what is it you do?
The Government is tightening up on contractors in the building trade in April. I haven't had to deal with CIS for over a year, so I haven't been taking much notice, but from what I understand, anyone dealing with contractors in future will have to phone a number to ensure the contractor is registered for tax. In short, it means, if you're not registered you won't get any work with new build.
The Government is tightening up on contractors in the building trade in April. I haven't had to deal with CIS for over a year, so I haven't been taking much notice, but from what I understand, anyone dealing with contractors in future will have to phone a number to ensure the contractor is registered for tax. In short, it means, if you're not registered you won't get any work with new build.
Eric Mc said:
Depreciation is not allowed as a tax deductable cost,I'm afraid.
Even though all accountants will provide depreciation in the accounts, the tax man demands that depreciation be reversed when calculating the taxable profits of the business. Instead, a Capital Allowance claim is substituted. The problem with Motor Cars (ANY Motor Cars - not just Lotuses) is that the maximum Capital Allwamce claimable in any one year is £3,000, irrespective of the cost of the vehicle. Therefore, if you bought an Exige for (say) £30,000, Depreciation at 25% would be £7,500 but Capital Allowances would only be £3,000.
Even though all accountants will provide depreciation in the accounts, the tax man demands that depreciation be reversed when calculating the taxable profits of the business. Instead, a Capital Allowance claim is substituted. The problem with Motor Cars (ANY Motor Cars - not just Lotuses) is that the maximum Capital Allwamce claimable in any one year is £3,000, irrespective of the cost of the vehicle. Therefore, if you bought an Exige for (say) £30,000, Depreciation at 25% would be £7,500 but Capital Allowances would only be £3,000.
What about if the car is finance leased? And, when you sell the car would the capital allowance not catch up with real life?
2 sMoKiN bArReLs said:
Mrs Trackside said:
In short, it means, if you're not registered you won't get any work with new build.
..or pay tax at 30%?
It wouldn't surprise me. As I said, it's not relevant to me anymore, so I don't know all the details.
more stuff here
Mrs Trackside said:
zcacogp, what is it you do?
Not a builder ... self-employed consultant, so (classically) I'll do anything that anyone pays me for! I specialise in handling of information, documents and records, for Central and Local Government, and the odd NDPB. ETA - Sorry to hear the Lotus plan is scuppered Tom. FWIW, most contractors with smart cars have them on lease, as it is meant to be better for tax reasons. My car is mine, personally, as I do very few business miles, and I like old cars with big engines, which apparently means I would get royally shafted tax-wise if I tried to put it through the company.
Oli.
Edited by zcacogp on Wednesday 7th March 22:50
2smokinbs - the tax allowances and deductions for leased vehicles are different to owned vehicles or vehicles being purchased on bank loans or HP finance. However, if the car costs over £12,000 (the Revenue's definition of an "Expensive" car), all allowable tax deductable leasing costs (and related depreciation - if appropriate) will be restricted using an "Expensive Car Formula" set out in the tax legislation.
You sre correct in that, when an owned car is eventually disposed of, the underclaimed Capital Allowances will suddenly be claimable at the point of disposal. The effect is that all the time you were using the vehicle the allowances were restricted and the full allowances only kick in when the vehicle is disposed of.
You sre correct in that, when an owned car is eventually disposed of, the underclaimed Capital Allowances will suddenly be claimable at the point of disposal. The effect is that all the time you were using the vehicle the allowances were restricted and the full allowances only kick in when the vehicle is disposed of.
Gassing Station | Business | Top of Page | What's New | My Stuff