katie@freelancersintheuk.co.uk
0779 397 2882
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Freelancers In The UK katie@freelancersintheuk.co.uk 0779 397 2882 |
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Abbey Tax - advising freelancersFlat Rate SchemeFollowing on the VAT rate reversion to 17.5% and the anti-avoidance measures associated with the reversion with effect from 1st January 2010, for users of the VAT Flat Rate Scheme [FRS], this does not automatically mean the FRS % has reverted to what it was pre-December 2008. Although many have reverted to the original FRS percentage rate – including many that might be used by members such as Computer & IT and Management Consultancy – there have been some changes such as financial services, architects & Structural Engineers and even membership organisations! The reason that some have changed is that HMRC have taken the opportunity to review the position based on more recent statistical data and many trade categories have been amended to rates different to those in place when the standard rate of VAT was previously 17.50%. It would be wise therefore for members to check the revised rates before completing any VAT returns that cover the period from 1st January 2010 onwards. The Pre Budget Report On a general point, I think that arguably the PBR has been quite kind to freelancers: even if some may be affected by the reduction in IT-based contracts which the government has indicated will be part of its public expenditure reduction, other freelancers may benefit from the support the Chancellor announced for the energy sector. I would also argue that no change to the small companies rate for CT, the fact that ‘income shifting’ did not make an appearance, nor were there moves to introduce something even nastier than IR35 should also be seen in a positive light. Furthermore, the fact that NIC will be increasing by 0.5% from 2011 for both employers and employees will make it even more beneficial for personal service company clients to use low salary and high dividends as part of their remuneration strategy. Although not necessarily of concern to the vast majority of subscribers, there may be bad news for certain umbrella companies. In the PBR in “Chapter 5: Achieving Fairness and Providing Opportunity” under the heading “Travel expenses and the National Minimum Wage” is the following: 5.94 The Government is committed to addressing the problem of the potentially exploitative arrangements implemented for some workers paid at or near the National Minimum Wage (NMW). These arrangements, which make use of the tax and NIC expenses rules, can adversely impact on NMW workers’ entitlement to earnings related social security benefits. HM Treasury, HMRC and the Department for Business, Innovation and Skills, will launch a consultation in the New Year inviting views on proposed changes to the NMW Regulations and whether this is the best approach to tackling this problem. Information kindly provided by Paul Mason of Abbey Tax News Alert - To access the latest industry news or find out more information about our products and services, please visit our new website at www.abbeytax.co.uk  |
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