Budget is good for small business but still hurts contractors

National accountancy firm Danbro has welcomed Chancellor George Osborne’s budget and said it was a good budget for small businesses.

However, in welcoming a raft of measures for small business owners, managing director Damian Broughton also said it was disappointing that new restrictions on travel and subsistence claims for contractors would be going ahead despite appeals from across industries to review the plans.

Danbro represents more than 8,000 contractors and businesses across the UK and hailed the cut to corporation tax, investment in infrastructure, reductions in business rates, support for the oil and gas sector and a drop in capital gains tax.

Yet, a move to crackdown on personal service companies in the public sector also caused concern that it could soon be extended to the private sector.

Damian says: “This was a good budget for small businesses and it’s great to see the Chancellor delivering a range of incentives that will enable self-employed people to grow and develop.

“It’s also pleasing to see a number of initiatives that will promote business and improve connectivity across the UK.

“The one big disappointment was that proposed restrictions on travel and subsistence expenses for those under “supervision, direction or control” will go ahead as planned. We fear this could negatively impact the important contractor sector and put a brake on the economy.

“We have been part of far-ranging calls for a judicial review of this plan but that has been ignored. We’ve worked hard to make sure our clients who are affected by this will still benefit from working under an employment business but many others are not prepared for these changes.

“The move to make employers and agencies responsible for deducting tax and national insurance from personal service companies in the public sector is also a worry. This shift in responsibility will cause a lot of concerns among organisations and I fear also heralds a move to make the private sector take on the same responsibilities in the months to come.

“The Government has pledged to review IR35 – which governs this process – but the lack of clarity on the issue could cause significant issues for self-employed people and employers alike.”