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ADVANCE Budget Update & Preparing For IR35

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Our update for you this week focuses on the budget, also how ADVANCE can support you and your teams.

As predicted, nothing was mentioned in the budget with regards to IR35. 

Headline points of The Budget

  • Personal tax threshold frozen at £12,570 with £50,270 for the higher rate tax payers until April 2026
  • National Living wage increased to £8.91 from April 2021
  • Extended grants for apprenticeship schemes
  • Furlough has been extended for all sectors until the end of September (RTI dates unknown) In July, 10% employer contribution, then 20% Aug Sep of the Furlough amount.  This will support the retail, travel & tourism & hospitability industries in the main
  • Self-employed grant continued until September (Grant 4 & 5)
  • New re-start grant in April 2021, retail £6,000 per premises, hospitality and leisure & personal care up to £18,000
  • Recovery Loan scheme, £25,000 – £10million up to the end of 2021, 80% government backing
  • 5% reduction in VAT for hospitality and tourism until end of September 2021
  • Stamp Duty extended to 30th June 2021. July-September 2020 nil threshold being increase from £125,000 to £250,000
  • 5% deposits for homebuyers
  • Corporation tax rise to 25% in April 2023, profits under £50,000 taxed at 19% then tapered up to the 25%
  • 2 year ”super deduction” scheme for capital investments

Please see below links to help with more of the detail around The Budget. 

Click here for the details from The Government on GOV.UK. 

In addition, click here for EY response to The Budget.

In addition, click here for the FCSA IR35 Hub with Q&As and latest news.

23rd March 2021

On March 23rd  2021 the government plan to publish a range of tax consultations and calls for evidence. None of the announcements will require legislation in the next finance bill.

Several of the consultations will be on HMRC’s administration strategy, looking to have a fully digital tax system able to support tax payers. It is expected the consultations will set the agenda for the autumn.

Areas likely to be consulted on are:

  • Climate change
  • Capital gains tax (CGT) – the outcome may be to raise CGT to align more closely with income tax or restrict the range and value of exemptions available
  • Timely tax payment – HMRC are looking at payment of tax at the point of sale for the payment of VAT.
  • Tax for self-employed may also be paid in instalments more regularly to avoid none payment or self-employed workers getting into debt
  • Tax for online purchases
  • Changes to the preferential tax treatment currently given to the self-employed

Immediate Effect AFTER the Budget

It was a rather strange experience, that as soon as it became evident that there was no ‘U’ turn on IR35, that we received a number of calls immediately after the budget from contractors looking to proceed switching to either Umbrella or CIS. 

The pace continues to grow each day and we expect Agencies and End Clients to start panicking within the next week.

Same advice 

Unfortunately, where End Clients put their head in the sand, there are going to be thousands of PSCs/limited contractors switching at the last minute which will result in a potentially trickier transition to another solution/Service Provider.

ADVANCE have continued momentum with webinars, contractor workshops, Q&A sessions, training sessions regarding our Umbrella & CIS solutions and IR35 training including accessing our IR35 status tool throughout this week.  We are here to support you and your teams.   

We are here to lend our support on whatever ‘level’ you may require.

If there is anything we can help you or your teams with, please don’t hesitate to get in touch with your Client Relationship Manager on 01244 564 564, we are all in the office at the end of the phone. 

Please don’t hesitate to let us know how we can help.  

ADVANCE

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