In a budget for ‘makers’ and ‘doers’ (a phrase that pretty much sums up the UK’s contracting sector) it was very much a case of ‘as you are’ for the vast majority of contractors.
Mr Osbourne has given HMRC new powers to demand disputed tax upfront from contractors in receipt of a HMRC enquiry notice or who has used a tax avoidance scheme, however this will not affect the typical contractor who runs there own Limited company or operates through an umbrella company.
Other items of particular interest to contractors were that there were no new measures to strengthen IR35 and two significant measures to combat tax and NI avoidance will take effect from 6 April 2014, which impact contractors working via offshore employment intermediaries and onshore false self-employment intermediaries.
Other points to note included in the budget were:
- Personal allowance to increase to £10,000 in 2014/15.
- The cap on annual pension inputs will fall from £50,000 to £40,000 with the limit on the value of a tax advantaged pension fund falling from £1.5m to £1.25m.
- Proposal to introduce flexible pension benefits from April 2015 meaning those wishing to take their pension may not be required to purchase an annuity.
- The threshold below which low-interest employee loans are not charged to tax will increase from £5,000 to £10,000 in 2014/15.
- Share and cash ISA’s will be formed together to form a simpler product known as a NISA which will increase the annual investment limit in these products to £15,000
- The annual allowance for Capital Gains Tax will increase to £11,000 in 2014/15.
- The rate of Corporation Tax for small business will remain at 20%.
- The Annual Investment Allowance (AIA) for businesses purchasing plant and machinery will increase from £250,000 to £500,000 in 2014/15.
- The threshold for VAT will increase to £81,000 from 1 April 2014.
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