How will Autumn statement affect Contractors?

23 November will see Hammond deliver his first Autumn Statement under May’s new leadership, but what will it hold for Limited Company contractors? Can they expect to see a barrage of changes that will modify the way they contract, or will they be left relatively untouched?

Only time will tell, but until then we can offer our expert predictions and advice on how to prepare for next week’s statement.

Public Sector IR35 review

We predict that the key changes affecting contractors who provide their services within the public sector, that were set out in the consultation document, will be announced in next week’s statement. Should these changes be implemented in April it will create a two tier IR35, making life very difficult for contractors wishing to work in the public sector.

Employment Status

We predict an announcement of further discussion documents or formal consultations into what “worker” and “employment” mean, and if employment rights should apply to contractors and freelancers. Perhaps we will see a final resolution where taxation and employment rights are aligned.

Penalties

We predict that the regime to encourage compliance is likely to be made fairer and less likely to produce overly excessive penalties for minor omissions (such as missing a Self Assessment deadline). This does not mean that persistent offenders will get away scot free, rather that persistency will be punished more severely, rather than the occasional omission.

Tax Avoidance Schemes

We expect to see further measures to restrict the use of aggressive tax schemes that avoid tax and possibly to introduce new penalties payable by providers when their scheme fails.

Corporation Tax

Whilst Hammond will not announce the same reduction in CT to 15% as Osborne may have done, we predict that he will however maintain the fall to 19% come 1 April 2017.

Simplification of Tax

The Office of Tax Simplification has suggested several types of new company that could be considered, such as the Sole Enterprise Protected Assets company (SEPA). This is a company that is taxed as an individual but with the protection for the taxpayer's personal assets. 

Making Tax Digital

It was made clear from the consultation process that many of the plans for unincorporated businesses will also be extended to Limited Companies. Freelancers and contractors should take notice of these changes and how they will affect them over the next four years.

Final thoughts

Don’t let next week’s impending statement cause you a week of worry. Download our free Autumn Statement predictions to know what could be coming, and how it might affect you. We also share our wish lists for what we’d like to see announced. Download it today and automatically get sent our full Autumn Statement review next Thursday.