Contractor Blog Zone
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It can’t have escaped your attention that this week’s budget has not been a popular one in the newspapers.
Most of the coverage has been about Chancellor Philip Hammond attacking White Van Man with his increase on National Insurance Contributions for the self-employed. More about that later.
It wasn’t a perfect budget for contractors, with Hammond also announcing a reduction in the tax-free dividend allowance from £5k to £2k. Theresa May has also been attacked for laughing so much in the House of Commons before Hammond got up to speak. Perhaps she’s a secret contractor because in the main it was pretty positive stuff for CEJ clients.
Although the dividend allowance cut will mean you’re likely to be £225 worse off if you’re a contractor, the first bit of good news is that it won’t be felt until the tax returns due in by January 2020.
That’s nearly THREE YEARS AWAY! Phew.
Secondly, the NIC increases won’t affect you because technically you’re an employee of your own limited company and don’t pay National Insurance.
Thirdly, next month two changes come into effect which will actually BENEFIT (we were shocked too) limited company contractors and Personal Service Companies as well as mainstream employees. The first is that the personal allowance will increase by £500 (a saving of £37.50 per year) and secondly the basic rate threshold will increase to £45k from £43k (a saving of £650 per year).
As well as all that, the Chancellor also chose not to extend the public sector IR35 changes into the private one, which won’t be much consolation to those of you in the public sector but is good news for the rest of you. What’s also worth remembering is that from April 1 this year corporation tax will fall by 1%, another gain for PSCs.
So not a bad budget after all!
As ever, if you have any questions get in touch: email Jo (firstname.lastname@example.org), Ben (email@example.com) or Peter (firstname.lastname@example.org).