With recent rumblings around decreasing the VAT registration threshold and ongoing rumours of IR35 changes being rolled out to the private sector, the budget was better than expected for small businesses and contractors.
The Chancellor Philip Hammond has delivered his Autumn Budget. His message was focused on building an economy fit for the future and giving the next generation more opportunities. Investing in technological advances and furthering skills to help face the challenges ahead. The Chancellor pointed out that this can't be achieved without supporting its backbone - ‘5.5 million small businesses who are responsible for nearly half of our private sector jobs, providing vibrancy and resilience’.
The Chancellor commented on the UK having one of the highest VAT registration thresholds, which the OTS suggest could discourage competition and growth. However, he recognised the contribution small businesses make to the economy and the pressures many are currently facing. As a result, the VAT registration threshold will remain fixed at £85,000 for the next two years (from April 2018) but this may be reviewed at a later date.
Perhaps one major surprise from the budget was IR35 or the lack of it in the Chancellor’s speech. Following on from the IR35 changes to the public sector in the Spring budget, it was anticipated rolling these changes out to the private sector might have been mentioned this time. Whilst missing from the speech, the government has committed to a ‘careful consultation’ on how to tackle non-compliance in the private sector, with no time frame currently outlined.
Our CEO Luke Desmond commented, “big business in the private sector is going to provide a much stronger fight than the public sector bodies could so I am still hopeful government won’t get an easy time rolling this out.”
You can read Luke’s full take on these IR35 proposals here https://www.linkedin.com/pulse/ir35-private-sector-budget-2017-luke-desmond/
It looks like the already mentioned plans to reduce the tax-free dividend allowance from £5,000 to £2,000 from April 2018 will still go ahead.
With the aim to look forward, not backward and build a Britain fit for the future, again the Chancellor has provided a rather bland budget. Perhaps a blessing for contractors after the media had predicted a far worse budget than actually materialised following the attacks we have seen on this industry over the last few budgets, particularly IR35 public sector and Flat rate scheme VAT changes we saw in April 17.Go Back
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